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94th Congress 1 
2d Session / 








JULY 1976 



Note. — Sections of this committee print, originally classified secret, 
have been deleted at the request of the Departments of State and Defense. 
Certain of these deletions are indicated by the notation "[Deleted]." 

Printed for the use of the Committee on Foreign Relations 




JOHN SPARKMAN, Alabama, Chairman 



STUART SYMINGTON, Missouri HUGH SCOTT, Pennsylvania 


GALE W. McGEE, Wyoming CHARLES H. PERCY, Illinois 

JOSEPH R. BIDEN, Jr., Delaware 

Pat M. Holt, Chief of Staff 
Arthur M. Kuhl, Chief Clerk 

Subcommittee on Foreign Assistance 
HUBERT H. HUMPHREY, Minnesota, Chairman 


GALE W. McGEE, Wyoming JACOB K. JAVITS, New York 

GEORGE S. McGOVERN, South Dakota HUGH SCOTT, Pennsylvania 

Richard Moose, Staff Associate 


On behalf of the Subcommittee on Foreign Assistance of the Senate 
Committee on Foreign Relations, I am pleased to publish this report 
on U.S. Military Sales to Iran. This is the first of a series of oversight 
activities in the foreign assistance area to be undertaken by the staff 
at the direction of the subcommittee. 

The Iranian military sales program is the largest in the world in 
terms of dollar value and the number of Americans involved in imple- 
menting the program, both in Iran and the United States. 

The size of the program, the strategic and political importance of 
Iran and the Persian Gulf area, and reported difficulties in program 
management and implementation are factors which led the Subcom- 
mittee to direct that this study be undertaken as its first oversight 

The study's findings and conclusions indicate that there are serious 
problems with some of the programs which merit the immediate atten- 
tion of the executive branch. I am concerned that, although the Depart- 
ment of Defense has taken initial corrective steps in the management 
aspects of the United States-Iran sales programs, neither the President 
nor the Secretary of State have recommended any basic policy changes. 
My overriding concern is that both the executive branch and the Con- 
gress have thus far ignored the substantial and far-reaching foreign 
policy implications which result from our deep involvement in sales, 
training and logistical supply programs with Iran. The decision to 
sell is in most instances followed by a long-term U.S. involvement in 
program implementation which affects the future foreign policy 
flexibility of the United States. 

The study was written by Robert Mantel, a Staff Associate of the 
Committee on Foreign Relations, and Geoffrey Kemp, a consultant 
to the committee for this project. Prior to joining the professional 
staff of the committee, Mr. Mantel worked for seven years in the In- 
ternational Affairs Division of the White House Office of Manage- 
ment and Budget (OMB) on military assistance and sales programs. 
Mr. Kemp is an Associate Professor of International Politics at the 
Fletcher School of Law and Diplomacy. He served as a consultant in 
the Department of Defense, Office of International Security Affairs 
(OSD/ISA) during 1975. 

The authors conducted extensive research in connection with this, 
study, including numerous interviews in both the United States and 
Iran. They were in Iran between March 2-17, 1976. At the request of 
Senator Case, the authors were accompanied during a portion of their 
research in Iran by Mr. Stephen Bryen of the committee staff. 

Hubert H. Humphrey, 
Cliairman, Subcommittee on Foreign Assistance. 


Digitized by the Internet Archive 
in 2013 




A. Reason for Study 1 

B. Scope and Focus of the Studv 2 



A. The Strategic Setting 7 


A. The Iranian Defense Budget 13 

B. Imperial Iranian Ground Forces 14 

C. Imperial Iranian Navy 19 

D. Imperial Iranian Air Force 25 



A. U.S. Citizens in Iran 33 

B. Socio-Economic change 37 


A. The Arms Transfer Process ( General) 38 

B. Roles of the Executive Branch Departments in Arms Transfers to 

Iran 41 


A. U.S. Interests and Iranian Security Policy 49 

B. Policy Implications of U.S. Military Involvement in Iran 50 

C. The Executive Branch Decision-Making Process on Iran Arms 

Transfers 53 


A. High Level Visitors to Iran 55 

B. Security Assistance Dollar Value 58 

C. List of Contractors and Personnel 59 



Iran is the largest single purchaser of U.S. military equipment. 
Government-to-government militarv sales to Iran increased over 
sevenfold from $524 million in Fiscal Year (FY) 1972 to $3.91 billion 
in FY 1974, slackening off a little to $2.6 billion in FY 1975. The pre- 
liminary sales estimate for FY 1976 is $1.3 billion. Sales in the 1972-76 
period totalled $10.4 billion. The number of official and private Amer- 
ican citizens in Iran, a large percentage of whom are involved in mili- 
tarv programs, has also increased from approximately 15,000-16,000 
in 1972 to 24,000 in 1976 ; it could easilv reach 50,000-60,000 or higher 
by 1980. 

* Iran is and will remain an extremely important country to the U.S. 
and its allies because of its geographical location and oil. Iran, on the 
other hand, places great importance on its relationship with the U.S., 
in large part because of the Iranian belief that the U.S. may come to 
Iran's defense if it is threatened. Iran has undertaken a major military 
expansion and modernization program in recent years to protect its 
interests from numerous perceived threats. Iranian officials also view 
the military buildup as the spearhead of a broader program to trans- 
form Iran into a modern economic as well as military power within 
twenty years. 

U.S. officials share many of Iran's defense concerns, and U.S. and 
Iranian foreign policy interests coincide in most instances, with the 
notable exception of oil pricing. Thus, Iran wants to buy its most 
sophisticated arms and defense equipment from the U.S. for political 
as well as economic reasons ; it prefers to contract through the Depart- 
ment of Defense on a government-to-government basis rather than 
deal directly with U.S. private companies. Arms sales are, therefore, 
an important component of U.S. -Iranian foreign relations. 

Because the U.S. has a major interest in the military security of 
Iran, most Iranian arms requests have been favorably received. 

In May, 1972, President Nixon and then National Security Advisor 
Kissinger, agreed for the first time to sell Iran virtually any conven- 
tional weapons it wanted and so instructed the bureaucracy in a mem- 
orandum in late July, 1972. In 1973, oil prices were quadrupled and 
from that time on Iranian purchases from the U.S. boomed. The 
direct participation of U.S. Government and industry in Iranian 
defense programs, which increased after this bonanza, has raised im- 
portant procedural and policy questions about the magnitude and 
nature of the programs, the manner in which they have been imple- 
mented, and the implications they pose for the future. 

In this study we focused our attention on the U.S. decision-making 
process, the U.S. involvement (managerial and operational) in imple- 
menting the arms sales programs to Iran, and on identifying and ana- 
lyzing future policy and programmatic implications inherent in the 
U.S. -Iranian military relationship as it has emerged. Based upon 



our research, extensive interviews with U.S. and Iranian officials and 
private citizens both in the U.S. and Iran, and a close examination 
of the current data on U.S. arms programs, the following findings 
emerge concerning U.S.-Iranian military relations and U.S. arms sales 


1. Iran has purchased large quantities of some of the most sophisti- 
cated equipment in the U.S. inventory including the F-14 Tom Cat 
Fighter and the DD993 modified Spruance Class destroyer. The F-14 
system is so complicated that the United States Navy is having major 
difficulty keeping it operational ; Iran's Spruance Class destroyer will 
be even more spohisticated than those being procured by the U.S. Navy. 
Iran is already the dominant military power in the Persian Gulf area. 
Upon delivery between now and 1981 of equipment ordered to date, 
Iran, on paper, can be regarded as a regional superpower. Although 
future purchases of new U.S. equipment and related services are likely 
to decline in absolute terms from the fiscal year 1974 and 1975 levels, 
any additional sales will add to an already sizeable inventory. 

— Iran is considering the purchase of additional sophisticated equip- 
ment such as the F-16 or F-18, and AWACS aircraft ; 

— To pay for new systems and complete its planned purchases of 
such systems as the Spruance Class destroyer, Iran has proposed 
barter arrangements (weapons for oil) to compensate for a re- 
duction in normal oil revenues ; 

2. The Government of Iran is attempting to create an extremely 
modern military establishment in a country that lacks the technical, 
educational and industrial base to provide the necessary trained per- 
sonnel and management capabilities to operate such an establishment 
effectively. Iran also lacks experience in logistics and support opera- 
tions and does not have the maintenance capabilities, the infrastructure 
(port facilities, roads, rail nets, etc.), and the construction capacity 
to implement its new programs independent of outside support. 

— Most informed observers feel that Iran will not be able to absorb 
and operate within the next five to ten years a large proportion 
of the sophisticated military systems purchased from the U.S. 
unless increasing numbers of American personnel go to Iran in 
a support capacity. This support, alone, may not be sufficient to 
guarantee success for the Iranian program ; 

— The schedule for virtually every major program except equip- 
ment deliveries to the point of entry into Iran has slipped con- 
siderably due to the limitations noted above ; 

— In the face of immense obstacles, our investigation indicated that 
the Iranian Armed Forces are making a maximum effort to en- 
sure the success of the modernization program; their efforts, 
however, are hampered because of rapid expansion in the civilian 
sector as well. The military, for example, has difficulty in match- 
ing civilian salary offers to the growing, but still insufficient num- 
bers of trained personnel. 

3. The 1972 decision by President Nixon to sell Iran the F-14 and/or 
the F-15 aircraft and, iii general, to let Iran buy anything it wanted, 
effectively exempted Iran from arms sales review processes in the State 


and Defense Departments. This lack of policy review on individual 
sales requests inhibited any inclinations in the Embassy, the U.S. 
military mission in Iran (ARMISH-MAAG), or desk officers in State 
and DOD to assert control over day-to-day events ; it created a bonanza 
for U.S. weapons manufacturers, the procurement branches of the 
three U.S. services and the Defense Security Assistance Agency. 

— Between 1973-75, the activities of U.S. arms salesmen, official and 
private, were not closely supervised by Executive Branch officials 
charged with doing so, or by the Congress ; 

— Each of the U.S. services, particularly the Air Force and Navy, 
was trying to sell equipment for its own reasons, usually to lower 
per-unit costs of its own procurements or to recoup part of its 
prior research and development investment. On occasion, the 
services fiercely competed with each other for sales to Iran, e.g. 
the Air Force and Navy to sell the F-15 and F-14 respectively ; 

— The services often did not inform the Iranians of the full extent 
of the training, logistics, and maintenance implications of the 
systems they were trying to sell. Thus, Iran may have been un- 
aware of the complexities involved in translating its purchases 
into an effective fighting force. Problems in all of these areas are 
very serious : 

— Discussions both in Washington and Iran have confirmed that 
until recently U.S. appreciation of the management problems of 
the arms programs in Iran was extremely limited ; 

— Secretary Schlesinger's decision to appoint a senior civilian De- 
fense Representative in Iran in September, 1975, to oversee and 
coordinate U.S. military programs in Iran is considered by vir- 
tually everyone to be a positive and necessary development, given 
the chaos and problems that had emerged in program management 
and implementation. Nevertheless, until there is clear policy direc- 
tion and effective program management in Washington, the prob- 
lems in the field (Iran) will continue* Deputy Secretary Ellsworth 
issued a directive in February, 1976, that he hopes will ensure co- 
ordination and policy direction within the DOD ; 

— Evidence gathered indicates that the Iranian arms sales program 
is not yet fully under control. Only with more effective control 
from Washington can the inherent propensity of civilian con- 
tractors and U.S. armed services to sell in an unrestrained manner 
be curbed. 

4. The presence of large and growing numbers of Americans in Iran 
has already given rise to socio-economic problems. Although many of 
these have proven to be manageable, they could become worse should 
there be a major change in U.S. -Iranian relations. 

— On the whole, U.S.-Iranian personal relationships are excellent, 
if somewhat formal ; 

— We were told that some of the early problems were due to the pres- 
ence of large numbers of young, single American male civilians 
without adequate recreational outlets. Decisions by some of the 
private companies to limit the number of unattached male em- 
ployees have improved social relations, especially in more tradi- 
tional cities such as Isfahan ; 

— There are many other foreigners in Iran as well as Americans, 
including British, German, South Korean, French, Filipino, In- 
dian and Pakistani ; 

76-929 O - 76 - 2 

— Anti- Americanism could become a serious problem in Iran, as it 
has elsewhere, if there were to be a change in government in Iran. 
The possibility of a future crisis situation cannot be totally ig- 
nored and for this reason contingency plans to deal with such an 
emergency are necessary. 

5. The U.S., having sold sophisticated arms in large quantities to 
Iran, has assumed a growing and significant "commitment" in terms 
of supporting that equipment — an unstated but nevertheless real ob- 
ligation to train Iranians and to provide logistical support for the 
lifetime of the equipment. To the extent that the decisions to sell the 
arms were politically motivated, a failure to provide follow-on sup- 
port to the satisfaction of Iran would vitiate the political benefits of 
having made the sales. The deep involvement of U.S. personnel assist- 
ing Iran in program implementation has significant foreign policy 
implications for the United States in the Persian Gulf. 

— The U.S. cannot abandon, substantially diminish, or even redirect 
its arms programs without precipitating a major crisis in U.S.- 
Iranian relations ; 

— If Iran is not able effectively to use the equipment it has pur- 
chased, it may blame the U.S. for the failures ; 

— There is general agreement among U.S. personnel involved with 
the Iranian programs that it is unlikely that Iran could go to war 
in the next five to ten years with its current and prospective inven- 
tory, i.e., purchases to date, of sophisticated weapons (as distinct 
from some of the less sophisticated ground equipment) without 
U.S. support on a day-to-day basis. 

6. The symbiotic relationship, and Iranian dependence on the U.S., 
has political advantages and disadvantages for both countries. In 
theory, the U.S. has the capabiKty to immobilize major components 
of the Iranian armed forces, especially the Air Force, by cutting off 
spares, munitions and maintenance support should Iran try to use U.S. 
equipment for purposes contrary to important U.S. interests. Iran 
knows this could happen and is therefore unlikely to precipitate a 
showdown, e.g. by aiding the Arabs against Israel. However, if, in 
extremis^ there were a crisis, the United States personnel in Iran could 
become, in a sense, hostages. The most difficult potential problems are 
likely to arise in those hypothetical "gray areas" when it is not self- 
evident that Iran's use of U.S. equipment is contrary to U.S. interests 
but when its use may embroil U.S. personnel in an on-going conflict 
situation, e.g. a new war between India and Pakistan in which the 
Iranians might participate with U.S. equipment. In this type of 
situation : 

— Any attempt to limit the end-use of U.S. equipment could result 
in a sharp deterioration in U.S. -Iranian relations; 

— Failure to limit the Iranians given our capabilities would amount 
to implicit endorsement of their action and tacit approval of the 
use of U.S. equipment which, in turn, would almost certainly 
mean the use of U.S. personnel in a support capacity. Whether 
this would mean front-line, i.e. base level, participation by uni- 
formed U.S. personnel or rear-line involvement by U.S. official 
or contractor personnel would depend upon the actual weapons 
used and the duration and intensity of the conflict. Clearly the 
most serious case would be the former ; 


— Since Iran has memories of the abrupt cut-off of U.S. arms to 
Pakistan in 1965, and to Turkey in 1974, and because of the 
political symbolism that stems from a close supplier-client arms 
relationship, it is not clear who really has influence over whom in 
time of an ambiguous crisis situation. Senior U.S. officials have 
expressed concern about the U.S. being labeled as an unreliable 
supplier; this concern undoubtedly inhibits the U.S. will to exer- 
cise its capability to terminate support ; 

— Thus far the U.S. has not had to face any serious problems con- 
cerning the use of U.S. arms by Iran. Iran's participation in 
counterinsurgency operations in Oman has not involved any U.S. 
personnel and the U.S. has not opposed the use of U.S. equipment 
in that conflict. 

7. Iranian officials see actual or potential military threats from 
all directions; they are particularly concerned about protecting Iran's 
oil "lifeline," the source of virtually all of the country's wealth and 
revenue. Iran views the Soviet Union as the major threat at the pres- 
ent time, having resolved its immediate differences with Iraq over the 
Kurds and the Shatt-al-Arab waterway. Iranian officials expressed 
concern about indirect, as well as direct, Soviet threats in the future 
through the latter 's ties with neighboring India. Afghanistan, and 
Iraq. These officials are also worried about Soviet support for radical 
groups on the Arab side of the Gulf and Soviet encouragement of 
separatist tendencies among certain tribes in Iran. U.S. officials are 
also concerned about many of these threats to Iran ; in particular, U.S. 
officials stress the importance of stability in the region and the un- 
interrupted flow of oil. The U.S., however, has officially neither 
endorsed nor rejected the Iranian perception of the threat. 

8. Iranian and U.S. officials do not feel that U.S. sales to Iran 
promote similar requests from Saudi Arabia. 

— Both states have substantially increased their defense expendi- 
tures, but not in an obviously competitive fashion ; 

— The Saudi Arabian military buildup, a large percentage of which 
is devoted to basic infrastructure such as roads, ports and housing, 
is not primarily driven by the Iranian buildup ; 

— There is little resemblance between the two programs. The most 
sophisticated weapons purchased by the Saudis are the F-5E 
fighter aircraft with Maverick and Sidewinder missiles and the 
Improved Hawk air defense system, whereas Iran has purchased 
the F-4D, F^IE. and F-14 aircraft. DD993 Spruance class de- 
stroyers, and Chieftain and M-60A1 tanks in addition to the 
F-5E and Improved Hawk : 

— Procurement decisions by both countries over the last decade 
indicate that neither has regarded the other as a primary threat. 
It is possible, but not likely, that as these countries expand their 
forces, they will come to regard each other as potential 

9. There is evidence of incipient military competition between Iran 
Pakistan, on the one hand, and India on the other. The Shah has stated 
that he would not tolerate any further dismemberment of Pakistan 
and has developed close military ties with Pakistan. That the Iranians 
are constructing new bases and facilities in the southeastern part of 
the country, in particular the huge tri-service ( army, navy, air force) 
complex at Chah Bahar. is evidence of its concern over potential 


threats from the region. Indian officials, on the other hand, have ex- 
pressed concern over growing maritime threats in the Indian Ocean 
and are seeking higher naval appropriations. 

10. Although Iran is arming against a number of potential threats 
ranging from the Soviet Union to blockage of the mouth of the Gulf 
(the Straits of Hormuz) and external support for separatism in Balu- 
chestan, it is clear from our discussions that factors other than opera- 
tional effectiveness, such as deterrence and prestige, seem to motivate 
Iran's hardware purchases. 

— Iran apparently believes that possession of the most advanced 
systems may serve as a deterrent ; 

— Many U.S. military personnel believe that weapons such as the 
F-14 aircraft and the DD993 Spruance class destroyers are not 
very useful to Iran in the probable contingencies that it might 
face in the next ten years ; 

— We were told that because of the priority given to "prestige" 
systems such as the F-14, already trained personnel assigned to 
other systems that are more relevant to near-term threats (F-5E 
and F-4), have been transferred to the newer systems with a 
resultant unmeasurable degradation in overall force effectiveness; 

— Iran's military programs are having a profound effect upon the 
socio-economic development of the country. Thousands of young 
Iranians are learning skills that have application to the economy 
as a whole. The creation of new bases, e.g. Chah Bahar, and the 
expansion of existing ones, e.g. Bandar Abbas, are resulting in 
the development of basic infrastructure and the creation of new 
communities in sparsely populated regions of the country. Thus 
the bases may be a catalyst for population redistribution and 
industrial growth. 

11. The recent history of U.S. arms sales to Iran highlights some 
of the inherent strengths and weaknesses of the Executive Branch in 
coordinating arms transfer policy and reconciling short with mid-to- 
long-term foreign policy interests. 

— The State Department and the Embassy in Tehran have tended 
to take a strong, united position on the Iran issue. Senior State 
Department officials appear not to have been prepared to tolerate 
open debate on possible adverse implications of unrestricted arms 
sales to Iran : 

— Within the Department of Defense, on the other hand, there were 
more diverse opinions due in part to the different missions, inter- 
ests and power bases of its numerous components. The sales and 
procurement representatives of the Defense Security Assistance 
Agency (DSAA) and the military services tended to support 
high levels of sales to Iran ; those responsible for policy formula- 
tion, training, and logistics and supply tended to be more critical ; 

— There have been no interagency studies in recent years dealing 
with arms sales to Iran or the Persian Gulf. A portion of a study 
of U.S. policy on arms transfers, pursuant to a directive issued in 
May, 1975, deals with this subject. As of June, 1976, this studv 
had still not been completed, reflecting both the complexity of 
the subject and the considerable disagreement within the Execu- 
tive Branch; 

— A current study of U.S. policy toward the Persian Gulf, begun 
in April, 1976, is not yet completed. 


12. Irrespective of the benefits and costs of U.S. sales programs to 
Iran, its history provides valuable insights concerning (1) the policy- 
making process which determined the nature and level of our current 
and future involvement; and (2) the policy and programmatic impli- 
cations of a deep U.S. military involvement with a major arms 

— The Iran case demonstrates that there needs to be more explicit 
recognition that when the United States sells major weapons in 
large numbers to a non-industrial state, it is, in effect, entering into 
a long-term commitment to provide support to those weapons. 
This life cycle support has military, political, economic and socio- 
logical implications which are not easy to anticipate and may 
eventually create new problems for the U.S. ; 
— Although the nature of U.S. -recipient relationships will vary 
depending upon circumstances, there is no such thing as a "non- 
binding" arms sales agreement. Even if the U.S. Government were 
to play no administrative role in foreign military sales, i.e. rely 
on the private sector for implementing arms sales, U.S. personnel 
and inevitably the U.S. Government, would still be involved. 

General Conclusions 

Our first general conclusion is that for at least three years U.S. arms 
sales to Iran were out of control and the programs were poorly man- 
aged. Badly managed arms sales programs are not in U.S. interests. 
We, therefore, believe that the Iran program demonstrates the im- 
portance of and need for effective Congressional oversight to focus 
attention on these issues and thereby ensure that the Executive Branch 
takes further action immediately to correct the management defi- 
ciencies in Iranian arms sales programs. 

Our second general conclusion is that, over time, the so-called 
"back-end" implementation aspects of arms sales can have a strong 
influence upon the flexibility of political leaders to change or modify 
their "front-end" choices. Events leading up to a sale itself, the so- 
called "front-end" issues, attract attention because they often deal 
explicitly with grand strategies and require high level policy deci- 
sions. The "back-end" process, i.e., what happens after a sales contract 
has been signed, involves the entire spectrum of military operations — 
procurement, finance, logistics, maintenance, and training — and may 
continue for ten or more years after the sale itself. The participation 
of large numbers of uniformed and civilian Americans, both in the 
recipient country and in the United States, may be necessary. This 
creates mutual commitments: the U.S. assumes the obligation of long- 
term support for the equipment it has sold; the purchaser becomes 
dependent on the U.S. in much the same manner as a local automobile 
dealer is dependent on Detroit. 

The long-run policy implications of these commitments or obliga- 
tions are important. On the one hand the United States has consider- 
able leverage over the recipient, who could not sever its military ties 
with the U.S. without a devastating effect upon its military capabili- 
ties for years to come. On the other hand, the United States reputation 
as a dependable supplier is at stake and it may be reluctant to use the 
leverage it has. 


This mutual and entangling relationship is not unique to the United 
States and its arms recipients. There is good evidence that the Soviet- 
Egyptian arms relationship has many of these same features. There- 
fore, a general lesson to be learned from the Iranian experience and 
applied to other major sales recipients is the need for both the Execu- 
tive and Legislative branches to become better informed about these 
"back-end" aspects of military sales programs. 


(A) Reasons for the Study 

Iran will remain an extremely important country to the United 
States and its Western allies for many years to come irrespective of 
its leadership or political ideology. A strong, pro-Western Iran pro- 
vides security for critical oil supplies from Persian Gulf oil produc- 
ing countries. Xo competitive alternatives to these oil supplies are in 
sight for at least the next decade. A strong, anti-Western Iran could 
eventually threaten the oil infrastructure of the Gulf area, with po- 
tentially catastrophic consequences for the West. A weak Iran, whether 
pro or anti-Western, could act as a catalyst for instability and conflict 
in the Gulf region. Any major conflict in the region would pose a 
threat to the oil supplies. 

U.S. officials, therefore, believe that it is in the overall policy inter- 
ests of the United States to support a strong, pro-Western Iran. The 
sale of military equipment and the provision of defense services such 
as training and support are regarded as important instruments of this 
policy. What is more controversial and more open to criticism, review 
and reassessment is the magnitude and nature of U.S. military pro- 
grams, the manner in which they have been implemented, and the im- 
plications they pose for the future. The purpose of this study, there- 
fore, is to examine in general terms the important factors influencing 
the supply and demand for American defense articles and services, 
and to discuss in more precise terms their potential effect upon U.S.- 
Iranian relations. 

There are at least seven specific but interrelated reasons for examin- 
ing the current status of U.S. military programs in Iran. 

First, Iran is currently the largest purchaser of U .S. military equip- 
ment and services. The value of the U.S. military sales to Iran over 
the past four years (FY 72-FY 76) amounts to $10.4 billion. There 
is every reason to expect requests for further major purchases from 
the United States over the coming years. 

Second* because of Iran's relatively underdeveloped infrastructure 
and paucity of skilled personnel, the United States is assisting the 
Iranian Government with the implementation of most of the U.S. 
military programs and many civilian projects which are scheduled to 
peak over the next five years. Thus, increasing numbers of American 
personnel and their dependents are going to Iran for periods ranging 
from a few months to several years. At the beginning of 1976, the 
estimated numbers were 24,000. Most informed observers believe these 
numbers will increase to 50,000-60.000 or higher by the end of the 
decade. Although the presence of large numbers of Americans in Iran 
should not necessarily be a source for concern, socio-political problems 
have already been encountered and can be anticipated in the future. 
In extremis, we cannot be insensitive to the fact that a major change 
in the political climate of U.S. -Iranian relations or increased internal 


or external conflict within Iran or between Iran and its neighbors 
might pose security difficulties for the American residents. 

Third, Iran's ability to buy more U.S. arms and to finance the im- 
plementation of existing programs is sensitive to oil revenues and the 
rising price of U.S. defense articles and services. A decline in Iran's 
oil revenues and continued price inflation in the costs of U.S. weapons 
has already led to the deferment of some orders for U.S. weapons and 
there have been tentative proposals for barter agreements exchanging 
oil for defense equipment. Thus, there is a direct relationship between 
Iranian oil revenues and level of arms purchases from the U.S. 

Fourth, the magnitude and nature of the Iranian military buildup 
has prompted speculation about a Persian Gulf arms race, which, in 
turn, could increase the prospects for armed conflict among the local 
states and lead to a possible disruption of oil supplies. For this reason 
among others, there has been increasing criticism of U.S. arms pales 
policy, including proposals to embargo U.S. arms sales to the Gulf 
countries. It is worth examining the credibility of the "arms-race" 

Fifth, there has been growing concern w T ithin the U.S. Executive 
Branch, especially in the Department of Defense, over the manage- 
ment of U.S. military programs. It was for this reason that Defense 
Secretary Schlesinger appointed in 1975 a senior civilian Defense De- 
partment representative to go to Iran and take charge of all DOD 
programs; this representative outranks the Chief of ARMISH- 
MAAG, a two-star general. These serious managerial problems have 
not been fully appreciated by the U.S. Congress. Since Congress has 
ultimate authority over U.S. military programs in Iran, it should be 
fully conversant with the facts and problems of our involvement. 

Sixth, the United States is not the only industrial country selling 
arms to Iran. Britain and France and to a lesser extent the Soviet 
Union, Italy and West Germany have sold military items and are 
capable of and anxious to obtain further orders. Thus we are, to some 
extent, competing for arms sales and many non-military items Iran 
wants to buy. This competitive market situation raises questions about 
worldwide U.S. arms sales policy, especially vis-a-vis the European 
allies, for there may be linkages between Gulf arms sales and the desire 
for more cooperation with NATO Europe over joint procurement and 
standardization programs. 

Seventh, irrespective of the benefits and costs of U.S. sales program 
to Iran, its history provides valuable insights concerning the policy- 
making processes which determined the nature of our current involve- 
ment. By understanding these processes, we can better understand 
future foreign policv issues that may emerge either in the context of 
our Persian Gulf policy or in other geographic areas where major U.S. 
military sales may be contemplated in the future. 

(B) Scope and Focus of the Study 

The scope and focus of this study will be limited to an analysis of the 
political, military, and economic factors influencing the supply and 
demand for U.S. defense articles and services, the scope and nature of 
U.S. military programs in Iran, and the foreign policy implications 
of the U.S. -Iranian defense relationship.* 

•This study does not Include an analysis of the military effectiveness of Iran's military 
procurements. This issue, although very important to overall U.S. interests, was considered 
to be beyond the scope of this particular review. 

In assessing supply and demand factors it can be said that Iran's 
requests for U.S. arms are a function of the Shah's perception of Iran's 
strategic requirements and the amount of revenue Iran has available 
to purchase weapons in the United States. Since the defense decision- 
making process in Iran is very straightforward, an analysis of the 
demand for particular defense programs requires three basic inputs : 
an understanding of the Shah, an understanding of the regional secu- 
rity environment which helps to condition his thinking, and an under- 
standing of Iran's financial assets. 

The factors influencing the supply of U.S. arms are more complex 
and therefore subject to more varied interpretation. The precise rea- 
sons why the U.S. Government sold Iran F-14's and DD993's rather 
than other aircraft or smaller naval vessels, stemmed from decisions 
based upon the visit of President Nixon and Dr. Kissinger to Iran in 
May 1972, the quadrupling of oil prices in 1973, the activities of the 
U.S. armed services, U.S. defense contractors, the U.S. Embassy in 
Tehran, the State Department and the Department of Defense. While 
it is not intended to present detailed case studies of each major U.S. 
sale, the procedures and practices that lead up to a sale, so-called 
"front-end" operations, will be considered as will the activities that 
occur after a contract for defense articles or services has been signed, 
the so-called "back-end" operations. 

76-929 O - 76 


The U.S. military relationship with Iran after World War II was 
limited to a relatively small grant military assistance program, con- 
tinuation of the U.S. Military Mission to the Imperial Iranian Gen- 
darmarie (GENMISH) established in 1943, and the establishment in 
1947 of the U.S. Army Mission Headquarters (ARMISH), a mission 
to the Ministry of War and the Iranian Army to enhance the efficiency 
of the army. Under the Mutual Defense Assistance Agreement of 1950, 
the U.S. agreed to provide technical personnel to discharge the U.S. 
government's responsibilities under the agreement. The U.S. provided 
$687 million in grant aid between 1950 and 1965, an average of $45 
million per year and an additional $149 million between 1965 and 1972. 
The U.S. recognized the strategic importance of Iran but it did not 
seek a dominant military role during the 50's and early 60's, in effect 
deferring to the British economic and military presence in the region. 

The creation in 1955 of the Baghdad Pact (Iraq, Turkey, U.K.. 
Pakistan and Iran), with a permanent political, military and eco- 
nomic organization, formalized the existing bilateral defense relation- 
ships that had developed since the war. In 1956, the U.S. became a 
member of the Economic Committee of the Pact and set up a military 
liaison office. In 1958, Secretary of State Dulles told the Baghdad Pact 
countries that the Eisenhower Doctrine — a statement enunciated in 
March 1957 that the U.S. would take action to counter Communist 
subversion in the Middle East — commits the U.S. to their defense as 
effectively as would membership in the Pact. Iraq withdrew from the 
Pact in 1959, and the remaining members renamed it the Central 
Treaty Organization (CENTO). The U.S. and Iran concluded a bilat- 
eral pact in March 1959 for cooperation in promoting the security and 
defense of CENTO imembers. Identical agreements were signed with 
Turkey and Pakistan. 

During the Kennedy Administration, the Shah became concerned 
with the reluctance of the U.S. to underwrite the cost of upgrading 
Iranian forces to a level that he felt necessary to match those of his 
now hostile neighbor, Iraq. President Kennedy informed the Shah dur- 
ing the latters visit to the U.S. in March 1962, that future U.S. aid 
would emphasize long-term economic development rather than mili- 
tary strength. Presidential Counsel Theodore Sorensen commented on 
the Administration's view of Iran at the time : 

In Iran the Shah insisted on our supporting an expensive 
army too large for border incidents and internal security and 
of no use in an all-out war. His army . . . resembled the 
proverbial man who was too heavy to do any light work and 
too light to do any heavy work.* 

Sorensen : Kennedy, X.Y., Harper & Row, 10G5, p. G28. 


However, President Kennedy reaffirmed the U.S. commitment to 
Iran's independence. The Shah accepted a cutback in military aid 
but determined to set upon a more independent course in foreign 

The Shah launched his "White Revolution" of economic and social 
reform in January 1963. Considerable opposition from religious 
leaders and landlords threatened by the reforms led to rioting in 
Tehran in June 1963. The Shah used these events to neutralize overt 
opposition, and he emerged with considerable strength internally 
that gave him more confidence in pursuing an independent foreign 

President Johnson changed U.S. policy toward Iran in 1964 by 
agreeing during the Shah's visit in June to provide Iran with foreign 
military sales credits. Between 1964-1969, Iran's economy continued 
to grow and the grant materiel, military assistance program was 
terminated in 1969 because Iran was now able to finance procurement 
of its defense needs. The U.S. concern and emphasis on promoting 
economic development in Iran persisted however, as U.S. agencies 
debated whether Iran could "afford" moderate levels of credit with- 
out excessive diversion from development needs. Credits actually pro- 
vided for military purchases were as follows : 

[In millions of dollars] 

Fiscal years 


1966 1967 

1968 1969 1970 1971 1972 1973 1974 

FMS Credits 

.._ 48 

90 161 

100 104 

Ex-lm Bank Credits 

120 200 300 200 

The qualitative and quantitative jump in the intensity of the U.S.- 
Iranian military relationship in the 1970's stems from the British 
decision in 1968 to terminate its military role "east of Suez" by 1971. 
Iran and certain Arab states, most notably Saudi Arabia, decided to 
increase their military forces to deter outside intervention and prevent 
"radical" forces from taking advantage of the resulting vacuum. 

The U.S. conducted a major review of its Persian Gulf policy at 
this time and decided that, despite its strong interest in the "stability" 
and independence of the region, it w r ould not try to replace the British 
with a U.S. military presence. The Nixon Administration decided to 
rely on local powers to preserve stability in the Gulf area and, ac- 
cordingl} 7 , adopted the "twin-pillar" policy that presumed cooperation 
between Iran and Saudi Arabia and a coincidence of their interests 
with those of the U.S. 

Data on U.S. arms sales to Iran since 1950 are contained in Annex A. 

The most significant arms transfer decision occurred during the May 
1972 visit to Tehran of President Nixon and Assistant to the President 
Henry Kissinger. The President informed the Shah (1) that the U.S. 
would sell Iran the F-14 or F-15 aircraft; and (2) that in the future, 
the U.S. would, in general, sell Iran any conventional weapons systems 
that it wanted. The decisions were confirmed in instructions to the 


Although these decisions are consistent with the "twin pillar" policy, 
they marked the beginning of the arms sales boom to Iran. The bu- 
reaucracy ceased its careful scrutiny of requests by Iran except for the 
most sophisticated systems involving release of state-of-the-art and 
highly classified technology. The dramatic increase in oil prices in 
1973 provided Iran with the means to buy what it wanted. To the best 
of our knowledge, there was no formal review of the 1972 decisions in 
light of the oil bonanza. The decisions are operative today, although 
an interagency study of U.S. arms-transfer policies to Iran and other 
countries in the area is currently underway. 


A. The Strategic Setting 

The high levels of Iran's demand for U.S. defense articles and serv- 
ices involve three basic factors. First, the decision-making process in 
Iran which leads to requests for U.S. and other foreign military equip- 
ment. Second, the strategic setting which influences threat perceptions 
and, therefore, in theory, the choice of weapons systems and force 
structures. Third, other factors, such as prestige and domestic political 
considerations, that influence procurement decisions. 


The defense decision-making process in Iran is relatively simple. 
The Shah decides on all major purchases; his Vice Minister of War, 
Air Force General Hassan Touf anian, implements these decisions. The 
Shah is very knowledgeable about modern weapons technology ; it has 
been said that he reads "Aviation Week" before he reads the Iranian 
press. He possesses enough expertise which, if combined with his power 
as supreme ruler of Iran, is sufficient to dampen even the most profes- 
sional opposition to his procurement plans. In other words, once the 
Shah has decided that a particular system is required by the Iranian 
forces, it is unlikely that the Iranian defense establishment will chal- 
lenge it and present serious alternatives. There is virtually no input 
into defense decisions by the civilian sector of the Iranian Government. 

As a consequence there has been little overall coordination of the 
total Iranian defense procurement plan. There is presently no 
equivalent within the Iranian defense structure to the Program, 
Planning and Budgeting System (PPBS), which contributes to, but 
does not always determine the formulation of U.S. defense procure- 
ment decisions. Our research indicates that many of the long-term im- 
plications of Iranian weapons systems procurement, especially those 
to do with manpower and logistics support, were not examined in 
any detail prior to the procurement decisions. 

One result is that the major problems facing Iran have to do with 
the implementation or "back-end" of weapons programs. This is in con- 
trast with the United States and most NATO countries where often 
the most urgent defense problems relate to the "front end" decisions 
(what to buy and at what cost). Once a system has been ordered by 
U.S. or NATO/Europe forces, implementation is facilitated by the 
pool of trained manpower available and the legacy of experience.* 

In the past the U.S. Military Mission in Iran (ARMISH-MAAG) 
played an important role in influencing decisions on procurement but 
once Iran was able to buy its weapons rather than rely on the U.S. 

♦However, it should be remembered that even West Germany had problems implementing 
the F-104 program because at that time (the early 1960's) the West German air force 
was not experienced in handling advanced equipment. 



grant MAP, the degree of U.S. influence declined, especially during 
the critical period 1972-75 when many of the decisions on the large 
programs were reached. Furthermore, during this period vociferous 
and often conflicting advice was being freely offered to the Iranian 
military establishment and the Shah by a host of U.S. actors, includ- 
ing the U.S. Navy, the U.S. Air Force, and U.S. weapons manufac- 
turers, each of whom had vested interests in selling Iran different 
weapons systems. 


Decisions about weapons procurement are closely held, rarely, if 
ever, subject to open debate, but frequently criticized by some Ameri- 
cans and privately by some Iranians: in contrast, however, there is 
more openness with regard to threat analysis. One reason for this is 
because there appears to be a greater consensus in Iran on the threats 
to Iran's security than on the desirability of buying specific weapons 
systems such as the F-14 aircraft. 

Iran's geography and oil give it strategic importance. 

During World War II Britain and the Soviet Union. invaded and 
partitioned Iran primarily to secure oil supplies and a logistics route 
from the Persian Gulf into the Soviet Union. 

The Shah, whose father, Reza Shah, abdicated after the invasion, has 
not forgotten this experience, which, coupled with the Soviet reluct- 
ance to evacuate Azerbaijan after the war, have made him and most 
Iranians extremely sensitive to the Soviet threat. 

Three factors need to be weighed when analyzing the threats to 
Iran's security : geography, the military capabilities of adversaries or 
potential adversaries, and the time frame. In terms of geography it 
can be argued that Iran faces threats or potential threats from all 
directions and therefore it requires a "from all directions" defense 
policy. However, the military capabilities of Iran's possible adver- 
saries vary, ranging from the "high intensity'' threats posed by the 
Soviet Union and other well-armed countries to "low intensity" threats 
posed by poorly-armed or weak adversaries such as internal terrorists 
or the insurgents in Oman. If the time factor is taken into account the 
threat potential of more distant countries, such as India, must be con- 
sidered. These three variables are summarized in the following table : 

Threats to Iran 

"High Intensity" Threats 

"Low Intensity" Threats 






Arab Gulf 



a. Threats to the Oil : 

Perhaps the most tangible threat to Iran concerns the vulnerability 
of her oil economy. If the flow of Iranian oil to the Western world 
were significantly reduced owing to military conflict, or the threat of 

military conflict, the political and economic impact would be grave. 
Hence it is not surprising that considerable thought and a great deal 
of money has been devoted to ensuring the security of oil supplies. 

Iran's oil is vulnerable to different threats at different points in the 
oil-flow cycle : the oil fields, the collecting system, the local terminal 
facilities and the oil sea lanes along which the super tankers tranship 
the oil to Europe, Asia, North America and Israel. 

The most important oil fields are located in the foothills of the 
Zagros Mountains in the Southwest of the country at the head of the 
Persian Gulf. Although these fields are fairly close to the Iraqi border, 
they do not present as easy or as vulnerable a target as the major Saudi 
oil fields or other targets in the oil cycle. Sabotage and air strikes could 
threaten the oil wells and the oil field pumps, but it would be difficult 
for Iraq or any other adversary to occupy these fields without mount- 
ing a major offensive. 

A more serious threat to the oil cycle concerns the vulnerability of 
the collecting system (pipelines and pumps) and local terminal facili- 
ties which Iran has developed to bring the oil from the fields and the 
terminals and to refine and/or tranship it. Major refineries are located 
at Abadan on the Shatt-al-Arab waterway adjacent to Iraq, at Ker- 
rrian Shah, a little over 100 miles from the Iraqi border, and at Tehran. 
The first two refineries are especially vulnerable to air attacks and the 
Abadan refinery is within artillery range of Iraq. 

The major storage and loading facilities for Iranian crude oil des- 
tined for export are located on Kharg Island near the major naval 
base at Bushehr. Kharg Island will remain an important strategic 
target so long as Iranian oil is exported by super tankers. 

The final threat relates to the sea lanes and the oil tankers as they 
sail from Kharg Island down the Persian Gulf and through the Straits 
of Hormuz into the Gulf of Oman, the Arabian Sea and the Indian 
Ocean. The Straits are the most important choke point along this 
route ; therefore, protection of the Straits is a major mission of the 
Iranian armed forces. 

Knowledgeable military planners have identified two targets within 
the Straits: the deep water channels themselves, which can be mined, 
and the tankers which can be threatened or attacked in several ways. 
The tankers are vulnerable to artillery and missile attack from land, 
attacks from air, and attacks from submarines and surface ships which 
can use a variety of weapons, including mines, torpedoes, missiles, 
guns and frogmen. In short, the existence of a choke point such as 
Hormuz presents a number of opportunities for would-be attackers 
which are less readily available at other points along a sea line of 
communications. Perhaps the most important contingency is that the 
Straits of Hormuz could be mined. Mines can be laid by sea or by air 
and have the great advantage that they can be laid covertly by "un- 
seen" forces. However, unlike certain other strategic straits such as the 
Straits of Tiran leading into the Gulf of Eilat or Bab el Mandeb or 
the .Tubal Straits leading into the south and north end of the Red Sea, 
it would probably be very difficult to block Hormuz by sinking a tanker 
in the navigation channel. The Hormuz Straits are fairly wide and 
deep for effective physical obstruction. 

Once tankers have safely moved through the Straits of Hormuz they 
face more diffuse potential threats as they transit the Gulf of Oman 


and proceed into the South Arabian Sea and the Indian Ocean. When 
they reach the Indian Ocean they proceed in two different directions. 
Some bear to the east and sail for Japan and the Far East ; others, the 
majority, proceed around the Cape of Good Hope into the South At- 
lantic and on to Europe and North America. Along these two sea lines 
of communication, different countries and political groups could pose 
different types of threats. Since it is reasonable to assume that con- 
flict and competition may increase along the Indian Ocean and the 
South Atlantic littoral, potential threats to the sea routes in this area 
cannot be lightly dismissed. From the perspective of Iran, the ques- 
tion is to what extent it, as distinct from the U.S. and West Europe, 
needs a credible sea control capability beyond the Straits of Hormuz 
and the Gulf of Oman to help deter possible threats. 

Clearly the relationship between these threats and Iran's defense 
programs is important. Each of the perceived threats listed alxwe 
requires somewhat different military preparedness, although there 
are some common elements. For example, the requirements for pre- 
venting threats to Iranian oil fields include capabilities for air defense 
and antisabotage measures. In contrast, requirements for protecting 
the sea lanes in the open seas are very different and include a long- 
range maritime capability and a basing structure to support it. Pro- 
tecting the Straits of Hormuz includes contingencies to prevent the 
emergency of hostile or potentially hostile regimes on the Arab side 
of the Gulf. Thus, Iran's occupation of the Tumb Islands and Abu 
Musa Island in 1971 and its participation in counter-insurgency 
operations in Oman have been designed to protect the entrance to the 
Straits and to prevent the spread of radical governments from the 
mouth of the Bab el Mandeb Strait, over which the Peoples Demo- 
cratic Republic of Yemen exercises some control, along the southern 
Arabian peninsula to the straits of Hormuz themselves. Iran's military 
activity in Oman primarily involved the use of land forces with 
logistics support and reconnaissance provided by air and naval 

I. The Soviet Threat: 

Iran shares a 1,250 mile border with the Soviet Union and most 
Iranians clearly regard that country as its most serious potential 
adversary because of the history of Soviet-Iranian relations and Iran's 
generally pro- western stance. However, given the military capabili- 
ties of the Soviet Union, the Iranians believe that in event of direct 
military confrontation between the two countries, they, standing alone, 
would not stand a chance. For this reason Iran's options for coping 
with a direct Soviet attack at the present time are limited : delay the 
Soviet advance as long aj possible and then either accept defeat or 
wait for the United States to intervene. 

In other words, Iranians feel that because the Soviet threat is so 
ominous, there is little that they can do about it except to raise the 
costs of a Soviet victory, contribute towards an overall western defense 
posture against the Soviet Union, and hope that the United States 
comes to its assistance if attacked. At present Iran is said to be more 
fearful of indirect Soviet support (1) for some of their neighbors, 
especially Iraq, Afghanistan and India, and (2) potentially dissident 
internal forces, as well as Soviet maritime activity in the Gulf and 
Indian Ocean, than a direct Soviet ground threat from the North. 


c. The Arab Threat: 

Iran, because of potential and existing military rivalries with the 
Arab countries of the Persian Gulf, especially Iraq and Saudi Arabia, 
perceives a threat from the West. 

Until Iran reached an accord with Iraq in 1975, relations between 
the two countries were extremely poor and there was a distinct possi- 
bility that serious fighting between them might have occurred along 
the Iranian-Iraqi border. However, the Shah's decision to terminate 
support for the Kurdish insurgency coupled with the termination of 
U.S. covert support not only permitted a relaxation of immediate 
tensions but also paved the way for a settlement of the long-standing 
dispute over the boundary lines between Iraq and Iran in the Shatt-al- 
Arab waterway. 

At the time of writing (June 1976) the military relations between 
Iran and its Arab neighbors are good. Iran has been cooperating with 
Oman, Saudi Arabia and Jordan in the conflict in the Dhof ar Province 
of Oman and relations with Bahrain have improved immeasureably 
now that Iran has relinquished its historic claim of that important 

However, the possibility of conflict with the Arabs in the future can- 
not be discounted, especially if there were to be a revolution in Saudi 
Arabia and the present regime was replaced by more extremist anti- 
AVestern elements. 

d. The Threat From the East and the Southeast : 

The possibility of conflict in the East involving Iran, Afghanistan, 
Pakistan and India is probably more serious than all other contin- 
gencies aside from the insurgency problems along the Arabian 
Peninsula and the threat to oil. 

Iran is especially concerned about the centrifugal tendencies within 
the Baluchestan regions of southeast Iran and Pakistan. A new con- 
flict between Pakistan and India, perhaps prompted by separatist 
tendencies in Baluchestan, could result in Iranian support for Pakistan 
since the Shah has stated that Iran would regard any attempt by India 
or another power to further dismember Pakistan as a threat to its 
own security. Although the Indian government is reluctant to openly 
criticize Iran's buildup, preferring to cite the U.S. and Pakistan's 
maritime activity, the close political, religious and military relations 
between Iran and Pakistan have not been ignored by Indian defense 

India is beginning to worry more about the possibility of maritime 
conflict in the Indian Ocean. Recent statements by senior Indian de- 
fense officials called for increases in naval appropriations to balance 
the growing capabilities of other maritime forces in the Indian Ocean. 

The best empirical indicators of Iran's increased perception of the 
potential threat from the East, and the possibility of Iranian- 
Pakistani-Indian hostility, are the new basing programs which the 
Iranian armed forces have initiated in the central and southeastern 
sectors of the country. (These are discussed in more detail in Section 


e. The Internal Threat: 

The internal threats to Iran come from three primary sources : left 
wing Communist guerrilla groups (the "lied" threat) ; right wing 
Moslem guerrilla groups (the "Black" threat) ; and the separatist 

76-929 O - 76 - 4 


movements, especially in Baluchestan. So far these have all been con- 
tained by the Iranian internal security forces. 

However, the most important factor which prevents the outbreak 
of more internal violence and separatist tendencies is the strength 
and loyalty of the Iranian armed forces. The Shah's decisions on 
weapons procurement, together with the preferential treatment ac- 
corded to the Iranian military in terms of pay and privileges, are 
designed, in part, to to keep the military content. This phenomenon, 
therefore, must be factored into any analysis of the Iranian demand 
for arms. 


The military threats to Iran's security seem to be sufficiently real 
tind diverse to enable the Shah to justify major investments in military 
forces. It is, therefore, not difficult for the Shah to make a rational 
case for high levels of investments in U.S. equipment, and the Execu- 
tive branch to respond positively, if the threat analysis is regarded 
as the primary determinant of procurement policy. In short, it is 
difficult to criticize Iran's perception that it needs a modern military 
force. What is more debatable and what will be considered in the 
remainder of this study is the suitability of and problems with the 
particular defense programs in which Iran has chosen to invest its 
resources and how these, in turn, relate to the United States. 


Iran has purchased sophisticated U.S. equipment for all three mili- 
tary services. This section describes the growth of the Iranian defense 
budget and discusses some of the major programs, focusing on the 
nature and extent of present and future U.S. involvement in assisting 
the Iranians to overcome some of the problems that have emerged in 
their implementation. 

A. The Iranian Defense Budget 

The Iranian defense budget, in current dollars, has increased from 
approximately $880 million in the Iranian fiscal year ending March 20, 
1970, to $9.4 billion in the } 7 ear ending March 20, 1977, almost an 
1100% increase in seven years. This percentage increase is equivalent 
to the U.S. defense budget going from $100 billion to $1.1 trillion in a 
seven-year period. The estimated total Iranian defense budget by 
Iranian fiscal year is as follows : 

[$ millions in current dollars] 

1970 1971 







Defense budget 

880 1,065 







Percent increase from previous year 



The largest percentage increase followed the oil price increase in the 
Iranian fiscal year ending March 20, 1974. The defense budget esti- 
mate for the current year is 616% larger than the last pre-oil price 
increase budget of 1972-73. 

Despite these increases, the percentage of the total Iranian budget 
allocated to defense has decreased from 32% in 1974 to 22% in 1975 
and 24% in 1976, as total Government expenditures increased from 
$11 billion in 1974 to $36.9 billion in 1976. The revenue increase, al- 
most entirely from oil, was of sufficient magnitude to fund virtually 
all programs, civil and military : choices between guns and butter were 
not necessary. The increase ill GXP from $10 billion in 1970 to over 
$50 billion in 1975 is ample evidence of the boom atmosphere. 

Financial discipline also broke down with such a favorable cash 
flow situation. Virtually every program, civil or military, had an im- 
port component, and Iran often had to compete with other countries 
for commodities that were in short supply. It tended to pay top dollar 
to obtain what it needed, often tying itself into long-term contracts. 
Not surprisingly, inflation rates soared. The waste factor in the 
Iranian economy has been estimated by informed observers to be as 
high as 40% because of asysmetrical development and poor coordina- 
tion among key factors such as manpower availability, infrastructure, 
port and rail facilities, etc. 

The turndown in revenues in late 1975 has had a sobering effect, and 
the Shah has taken steps to restore some fiscal discipline, including an 



anti-profiteering campaign, a divestiture program requiring that 49% 
of certain industries be sold to the workers, and a stretchout of num- 
erous projects. The only new projects in the 1976-77 budget are in the 
nuclear energy field. 

The defense sector has been directly affected by the revenue shortfall. 
For example, Iran cut back its projected purchase of Spruance class de- 
stroyers from six to four, and has placed a hold on construction of the 
new air and naval base at Chah Bahar ; we understand that payment to 
a number of contractors for work already completed at the base is 
being held up pending further review of the budget. 

For all these reasons, the defense budget is unlikely to increase sig- 
nificantly in future years and may have peaked in 1976-77. Iran is not 
expected to purchase military equipment from the U.S. or third coun- 
tries at the levels of the past three years, unless barter agreements 
with U.S. companies to exchange additional weapons systems for off- 
take are negotiated. 

B. Imperial Iranian Ground Forces (IIGF) 

The Iranian Army is the largest and most established of the three 
services. It accounts for the bulk of Iran's military manpower ; plans 
are underway for major increases in ground force strength. The Army 
is purchasing some of the latest American artillery and missiles, the 
British Chieftain Tank and Scorpian Light Tank and American and 
Italian helicopters. 

If the planned expansion of the Iranian Army continues on schedule 
it will have, by 1978, an army at least twice as large as Britain's in 
terms of manpower, armor and army aviation. In view of Britain's 
former role as a major occupying power and later as policeman of the 
Persian Gulf, the shift in relative force levels is significant. 


1975 1978 (Planned) 

Personnel 222,720(103%) 

Divisions 7H 

Tanks 1, 108 [deleted] 

Artillery 102 

Helicopters 327 

The budget for the IIGF for 21 March 197G through 28 March 1977 
is estimated as follows : 



Personnel [deleted 1 

Operations & Maintenance [-deleted] 

Procurement/Production [deleted 1 

Special Activities [deleted] 

Elements of the Iranian Army, together with support from the Air 
Force and Navy, have been actively engaged in counterinsurgency 
operations in Oman. As far as can be ascertained, its performance 
steadily improved in that theatre and we have no evidence of any 
major direct U.S. assistance in the operations. 



At present the deployment of the major forces of the IGF and the 
major bases are in the western part of the country, reflecting Iran's 
recent concern with the Iraqi threat. The disposition of the front line 
main force units is as follows : 

Northwest : 

[deleted] Rezaiyeh 

[deleted] Sanandaj 

[deleted] Qazvin 

West : 

[deleted] Khorensabad 

[deleted] Kerman Shah 

[deleted] Ahwaz 

Northeast : 

[deleted] Mashad 

Over the next few years the IGF will deploy a [deleted]. 

There is evidence that the IIGF intends to build many of its future 
bases in the southeastern part of the country. One of these bases (Chah 
Bahar), currently under construction, will have a distinctive tri- 
service (army, navy, air force) character. This may be seen as a reflec- 
tion of a change in threat perception from the north and west towards 
the south and east. 


The major weapons programs currently programmed for the IGF 
are listed in the following table : 



■a „,— 






I cvi cr> to <r> ui 


E E 
E E 


bE =•£ 





The two largest U.S. programs in the IIGF are armor and army 
aviation. Most of the new armored vehicles are being procured from 
Britain (it has been reported that a total of 2,250 Chieftain medium 
tanks have been ordered, of which 435 had been delivered by Feb- 
ruary 1976). The British are providing support for the Chieftain 
program, as well as the smaller Scorpion tank, which Iran is also 

1. Army Aviation: 

Iran intends to expand army aviation from its current level of ap- 
proximately 8.000 men and 406 aircraft to 14,000 personnel and over 
800 late model helicopters by 1978. The initial costs of this program 
for procurement, installation and training is estimated at about $4 

The United States is the largest provider of helicopters for the 
army aviation program. This program will account for the largest 
single component of the U.S. personnel presence working directlv with 
the IIGF. 

The IIAA-U.S. program concept was generally agreed to in the 
fall of 1972; a direct/letter contract was signed between Bell Heli- 
copter International (BHI) and the Government of Iran (GOI) on 
21 February 1973 to train both pilots and technical personnel. Train- 
ing started on 10 April 1973 for both groups. Because serious difficul- 
ties arose in implemeting the direct commercial contract, at the request 
of the GOI the Direct/Letter Contract was converted to FMS (gov- 
ernment to government) cases on 11 March 1974. 

The deliveries of the two basic U.S. helicopters (AH-IJ and 214) 
are scheduled to be completed by mid-1977 and the end of 1979 re- 
spectively. The original plan was that the training and maintenance 
programs progress from a 100% reliance on the U.S. to zero percent 
reliance by mid- 1978. Thus the programs, which are being conducted 
at the Imperial Army Aviation Training Center (IIAATC) in Is- 
fahan and the Helicopter Logistics Department (HLD) in Tehran, 
are approximately at the mid-point of the schedule. 

As of February 29, 1976, the prime U.S. contractor, BHI, 
employed 1,843 personnel to provide managerial, flight and mainte- 
nance training. It is expected that this figure will increase to about 
2,100 by the end of 1979. Although the majority of these personnel will 
will be located in Isfahan and Tehran, two additional Forward Area 
Support Centers to train intermediate/depot maintenance personnel 
will be established. 

Based upon scheduled training, BHI will be able to phase out of the 
training program by mid-1978. However, in the view of those most 
familiar with the program, there is virtually no chance that these 
schedules will be met and it appears that GOI reliance upon front-line 
American skills, especiallv in automatic data processing (ADP) and 
engineering, will extend far beyond the April, 1978 time frame. 

Already major sociological problems have arisen in the helicopter 
program. Some difficulties, especially those relating to the cultural 
differences between single male employees of BHI and the residents 
of Isfahan seem to have been dampened. Housing conditions for U.S. 
personnel have improved and there are now strict quotas for the num- 
ber of single U.S. males in the program (about 10 percent). 


Secondly, a strike by 140 Bell helicopter pilots in August 1975 
resulted in their dismissal, further delaying the scheduled program.* 

2. TOW Missile Program: 

Iran purchased the TOW Heavy Antitank Weapon in 1973. The 
initial procurement was about 250 launchers in two FMS sales. Sub- 
sequently, it initiated an FMS case for approximately 100 more 
launchers. Iran has also contracted with Emerson Electronics for the 
co-production of up to 1,000 TOW missile launchers through 1980 and 
is expected to sign an agreement to co-produce the missile. The co- 
production program will permit the IIGF to replace the 106mm Re- 
coilless Rifle with the TOW system in the future. 


Depot maintenance support is provided b}^ Iran Electronics Indus- 
tries (IEI) through a contract with Hughes Aircraft Corporation. 
Direct and general support maintenance is provided by IIGF person- 
nel trained in the U.S. Of the 26 personnel trained to date, 14 are still 
working on the TOW system. IIGF has initiated a program to train 
additional personnel in wire-guided missile maintenance at IEI and 
in the U.S. Currently 44 personnel are undergoing intensive English 
language training before entering maintenance training. 

Since the GOI has elected to establish a depot maintenance capa- 
bility for the TOW system, the IIGF will continue to be dependent 
upon the U.S. for the foreseeable future. 

3. The M109 155mm SP Howitzer Program : 

The M109 155mm SP Howitzer is not a new weapon system in the 
IIGF; therefore, Iran's ability to absorb this piece of equipment 
should be an important indicator of their overall ground force self- 
sufficiency. The first Ml09's were purchased in 1968 and delivered in 
1971. More were purchased in 1972, 1973 and 1974. When all deliveries 
are completed IIGF will have roughly 400 Ml09's. 

Although purchases of the M109 represent a modernization of an 
existing capability, extensive training in vehicle operation and main- 
tenance has been required. This training is conducted at the Artillery 
School in Isfahan with the assistance of a U.S. advisor. Maintenance 
training is conducted at the Combat Support Training Center at 

The self-propelled artillery system requires more maintenance and 
more spare parts resupply than towed weapons. The IIGF logistic 
system can meet the maintenance and spare parts requirements. How- 
ever, it will take additional time and a continued advisory effort to 
make the logistical system fully effective. 

ARMISH-MAAG estimates that the M109 system can be sustained 
with current IIGF capability and a continued advisory effort at the 
present level. 

*100 of the pilots left Iran and returned to the United States. 40 were rehired along 
with replacements for the 100 who left. The company is currently fully staffed. 



The major problems relating to the U.S. involvement with the IIGF 
concern the army aviation program. As with other advanced pro- 
grams the main difficulties relate to training schedules, basing facili- 
ties, and maintenance and logistics support tasks. 

The formal training schedules prepared by U.S. companies which 
indicate a rapid rise and equally rapid decline in the direct U.S. in- 
volvement after 1978 are not considered to be realistic by U.S. officials. 
From our observations and discussions we believe that the U.S. will 
remain directly associated with the IIAA program well into the 1980's. 

C. Imperial Iranian Navy (UN) 

The UN is the smallest of the three services; however, it plans to 
triple the number of naval personnel and double the number of ships 
in the inventory by 1978. By 1981, it plans to have at least four DD993 
Modified Spruance Class destroyers operating out of a new naval base 
to be built at Chah Bahar on the Gulf of Oman. Chah Bahar is only 
50 nautical miles from the Pakistan border and approximately 800 
nautical miles from Bombay. 

The strategic and political implications of the Iranian naval expan- 
sion program are potentially far-reaching and have heretofore received 
little attention. 


1976 1978 1984 




Hovercraft __. 

Fixed Wing A/C 


The budget for the UN for the current Iranian year (21 March 76 
through 20 March 77) is estimated as follows : 

Dollar 8 in 

Personnel [deleted] 

Operations & Maintenance [deleted] 

Procurement/Production , [deleted] 

Special Activities [deleted] 


The UN currently operates from six naval bases of which Bandar 
Abbas, Bushehr, and Khorramshahr are the most important. There is 
a training base at Bandar Pahlavi on the Caspian Sea and smaller 
bases on Kharg Island and Hengam Island in the Persian Gulf. 

The largest of the new bases will be located at Chah Bahar but at 
the time of writing construction has not yet begun. Most of the money 
to be allocated for new base construction will be for expansion pro- 
grams at Bandar Abbas, Bushehr and Chah Bahar. Some idea of the 

76-929 O - 76 














magnitude of the overall expansion of UN construction can be seen 
from the following table : 

UN Construction: Growth Comparison (Budgetary Estimates) 

[$ Millions] 

Third Plan: (1963-68) 5.5 

Fourth Plan: (1968-73) 55.0 

Fifth Plan: (1973-78) 1200.00 


The following table shows the major weapons programs for which 
the UN has signed contracts. It does not include items of equipment 
that are currently under negotiation or may be considered in the 
future : 


ir> into 
to cioi 


3 2°" 

i- Em 


««0 H-S 

cp + 







DD993 {Modified Sprvance Class Destroyer) 

In December 1973, the Shah authorized purchase of two anti-air 
warfare (A AW) configured DD963's (designated DD993) at a unit 
price of $238 million. In September 1974, a letter of offer for an ad- 
ditional four ships was signed. 

In October 1975 the U.S. Navy informed the GOI that the cost of 
the six-ship Iranian program (including training and support) had 
increased from about $1.47 billion to about $2.0 billion. The GOI 
expressed sharp concern over the price increase. In January 1976, the 
GOI cancelled two DD993's and decided to limit the program to four 
ships. The program cost savings would be approximately $513,370,000, 
with an additional $35 million savings in training costs. 

According to latest U.S. (June 1976) estimates the delivery of the 
first pD993 to the IIN is scheduled for April 1980. Deliveries of the 
remaining three ships will be on or about October 1980, April 1981, 
and September 1981. If the IIN is to introduce the DD993 into opera- 
tional service in a reasonable time frame, the schedules for two major 
requirements — crew training, and the base, maintenance, and logistics 
facilities which are to be located at Chah Bahar — will have to be 


Each DD993 will require a fully trained crew of 264 personnel for 
a total of 1,056 for the four ships. It is estimated that at least 2,000 
people must be recruited into the training program since an attrition 
rate of about 50 percent can be anticipated. 

The original training schedule in the United States was to have 
commenced on July 1, 1975, with an input of 16 people per week. As 
of March 1976, only 23 had begun U.S. training, as opposed to about 
450 who were authorized. Unless there is a marked increase in this 
rate, it is unlikely that the original delivery date for DD993 to the 
IIN can be kept if the ships are to be manned by IIN crews. 


It has always been the intention of Iran to base the DD993's at 
Chah Bahar. However, as of March 1976, work on the naval facilities 
had not begun and, indeed, no contract for construction had been 
signed (this is not to be confused with the Air Force base at Chah 
Bahar, which is nearly finished). Those familiar with the program 
believe that if a contract for Chah Bahar were to be signed in the near 
future, an absolute minimum of five to seven years would be required 
to ready the facilities to accommodate the DD993's. This means that 
the verv earliest Chah Bahar would be ready would be between 1982- 
1984. If the DD993's arrive on schedule in 1980 and 1981, an alternative 
home base would be needed for at least two years. 

The most logical alternative base would be Bandar Abbas but for 
the fact that extensive modification of its facilities would be required 
to accommodate the DD993's. These modifications had not begun in 
March 1976, and we were told that no decision had been taken on this 



It is presently estimated that about 344 U.S. personnel will be re- 
quired by the late 1970's to support the DD993 program. Of these 14 
will be uniformed personnel (2 MAAG's and 12 TAFT) and the re- 
mainder will be contractor personnel. The contractor personnel should 
begin to arrive in 1978 and are scheduled to remain for at least five 


Given the slippage in both the timing and support for the DD993 
program, these ships are not likely to become fully operational until 
the mid-to-late 1980's. 

Tang Class Submarine Program 

Iran has purchased three U.S. Tang class diesel submarines (late 
World War II vintage) — Trout, Wahoo, and Tang — for a cost of $54 
million. Current plans call for the overhaul of the first submarine 
(Trout) in the U.S. in 1977, and the overhaul of Wahoo and Tang in 
1978 and 1979. Trout would then be turned over to the UN in early 
1979 ; Wahoo would be delivered towards the end of 1979 and Tang in 

Concurrent with the overhaul of the submarines, present Iranian 
plans call for the training of 500 highly qualified, sea experienced, 
petty officer volunteers to satisfy submarine crew requirements. This 
plan would provide for three certified submarine crews (300 men) and 
two crews to be used as replacement personnel (200 men). The first 
crew was due to begin training in the United States in the second quar- 
ter of 1976. However, at the time of writing (June 1976) there seem to 
be difficulties for the UN in recruiting the necessary personnel given 
the overall demands of the fleet and the competing requirements for the 
DD993 program. We understand, however, that this situation is 

The U.S. Navy has made it clear that any slippage in the training 
program may increase costs and complicate the scheduled overhaul of 
the ships. 

The UN RH-53D Program 

The UN has ordered six RH-53D helicopters from the United 
States. They are scheduled to be delivered in 1976 and 1977. The 
Iranians hope to attain complete operational capability, a complete 
logistics support system, and an established depot level maintenance 
capability for this program by 1981. This date may well be delayed, 
however, because construction of the base for these helicopters at 
Bandar Abbas has slipped by about two years, to 1978. Use of an 
interim location will delay the achievement of an independent oper- 
ational and maintenance capability. In addition, the support con- 
tract for 29 Sikorsky and EDO technicians had not been signed by 
March 1976. If these people do not arrive by the time the RH-53D's 
arrive in Iran, a day-for-day slippage can be anticipated. The UN 
is also experiencing difficulty getting its personnel through the highly 
technical electronics schools which are required for the RH-53D 



Based upon recent estimates (April 1976) the following table reflects 
past, present and projected personnel figures for current contracts to 
provide U.S. personnel support for the Iranian Navy : 

Fiscal years 

1975 1976 1977 1978 1979 1980 1981 

Military Assistance Advisory Groups (MAAG) 17 17 27 27 27 27 27 

Uniformed Personnel 

Technical Assistance Field Team (TAFT) 35 138 137 125 120 115 115 

Mobile Training Teams (MTT's) (Man/Years) 4 5 6 11 11 11 6 

Subtotal 56 160 170 163 158 153 148 


DD993 330 330 330 330 

RH 53D 35 35 35 ? ? 

Tang 50 50 50 50 

StanwicM 200 200 200 200 200 200 200 

Subtotal _ _ 200 200 235 615 615 580 580 

Total 256 360 405 778 773 733 728 

i Assumes UN continues to employ 200 U.S. personnel under contract with the Stanwick Company. 

These figures do not include additional American personnel that 
may be required in connection with any major new purchases of U.S. 
weapons, or the expansion of the existing programs. Nor do the 
figures include U.S. contract personnel who may be involved in the 
construction of the Chah Bahar naval facility. 

Using these figures as a rough guide for the level of U.S. involve- 
ment it is possible to estimate the total numbers of Americans who 
will be in Iran associated with UN programs (including dependents) 
by applying an overall multiplier of 3.2 to include dependents for per- 
sonnel on accompanied tours : 

Fiscal years 

1. Total U.S. personnel (less unaccompanied TAFT's 
& MTT's) 

2. X 3.2 factor.. 

3. TAFT's & MTT's 

Total 950 1,054 1,183 2,832 2,829 2,675 2,670 


The implications of the Iranian Navy's expansion program should 
be viewed in both the strategic and political contexts. In strategic terms 
the development of a naval force capable of sustained operations in 
the Indian Ocean could have an impact upon the overall balance of 
maritime power in the area. Iran is buying warships theoretically 
capable of important sea control missions along the vital oil sea lines 
of communication from the Persian Gulf to Japan and Europe. How- 
ever, given the slippages in the DD993 program it will be years before 
this capability becomes fully effective. 























On the political level, Irarrs naval program means a growing rela- 
tionship with the United States Navy. As with other programs the 
inevitable slippages and bottlenecks in the program could result in 
friction between the U.S. and Iran. 

D. Imperial Iranian Air Force (IIAF) 

The Iranian Air Force (IIAF) is said to be the pride and joy of 
the Shah. Of the three services, the Air Force has received the bulk of 
the funds available for modernization in recent years and is the most 
technologically advanced. In fact, the IIAF inventory will be one of 
the most modern in the world, including the F-14A with the Phoenix 
missile system, F-4E, F-4D, RF-4, F-5E, P-3F. and C-130H aircraft. 
The IIAF is assigned the usual missions of any air force, plus the air 
defense mission, including operation of ground-to-air missiles. Project 
Seek Sentry, an air defense radar network, and eight battalions of 
I-Hawk are on order to help fulfill this mission. 

On paper the IIAF in the early 1980's would appear to be extremely 
potent. The ability of the IIAF to absorb and effectively utilize these 
systems by that time is, however, open to question. 


1976 1978 1981 

Personnel ._ 74,000 

Bases 8 

Squadrons 23 

Aircraft 392 

(Fighters) (320) [deleted] 

(Transport) (56) 

(Other) (16) 

Rapier Bns 2 

l-Hawk Bns „ 1 


The IIAF will probably have to increase personnel levels by over 
fifty percent by 1981 to operate effectively the sophisticated systems 
that will be in the inventory at that time. The following table presents 
a breakdown of existing authorized personnel and projected increases 
in authorized levels through 1979 : 


The IIAF is likely to attain its recruitment objectives in terms of 
total numbers. The critical variable, however, in determining the effec- 
tiveness of the IIAF in the years ahead and its success in achieving 
self-sufficiency is the degree to which the IIAF can recruit and train 
the technical personnel required to perform operation, maintenance 
and logistical functions associated with its sophisticated inventory. 
Technical manpower requirements in the IIAF, currently esti- 
mated at about 20.000. are likely to double by 1981. The existing short- 
age is estimated at 7,000; it may increase to at least 8,000 by 1978 and 
10,000 by 1981 as growing requirements associated with the F-14's, 
I-Hawk's and F-4E's outdistance the output of the training pro- 
grams. Iran is becoming increasingly aware of the gap between the 
technical requirements of IIAF weapons system and its ability to 
perform them adequately. Whether this increasing awareness affects 


Iran's procurement decisions on new systems under consideration re- 
mains to be seen. 


The IIAF currently has seven operating bases, all of which are in 
the northwest, west and southwestern part of the country, with three 
forward operating bases in the east. Under construction are three new 
operating bases — one at Chah Bahar on the Gulf of Oman in the 
southeastern part of the country, a second, Khatami, at Isfahan, and 
the third, Omediah, at the head of the Persian Gulf. 


The following table lists major IIAF programs for which contracts 
have already been signed or for which signature is imminent, e.g. 
Peace Log, and their status. 



CM .-I 00 (OrHrH 

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The Iranian Government is considering the purchase of additional 
fighter, attack and special purpose aircraft. Although no decisions 
have been made, the Iranian Government is reported to be considering 
a buy of 250-300 of either the F-16 or F-18 fighter aircraft, from 2 to 
6 Airborne Warning and Control Aircraft (AWAC's), additional 
747 aircraft, between 4 and 10 E-2C "Hawkeye" electronically equip- 
ped aircraft, and 12 HH-53 long-range search and rescue helicopters. 


The 307 Air Force TAFT Personnel are working in the following 
weapons systems and support areas : 

Aircraft Maintenance: (127) F-4(76), F-5(51) ; Communications/ 
Electronics/Meteorology (74) ; Logistics (62) ; Training & Adminis- 
tration (31) ; Air Defense (7) ; Command Element (6). 

They are assigned to the following operating areas : 

No. per- 
Locations or Program: FY re 

Doshen Tappeh 101 

Mehrabad 49 

Shahrokhi 40 

Shiraz 23 

Vahdati 35 

Tabriz 19 

Bushehr 25 

Bandar Abbas 15 

I-Hawk (Army) 58 

F-14 (Navy) 15 


1. F-UA: 

President Nixon agreed to sell the F-14 and/or F-15 to Iran during 
their visit to Tehran in May 1972. The U.S. Navy and U.S. Air Force 
actively promoted their respective aircraft. Iran decided to buy the 
F-14, primarily because it carries the Phoenix weapons system which 
is the only system capable of reaching the high flying Soviet MIG-25's 
that are reported to periodically overfly Iran. 

Iran signed a letter of offer (LOA) in January 1974, for 30 aircraft 
at $845 million, and a second LOA in June 1974, for an additional 50 
aircraft at $1.1 billion. Subsequent support contracts and purchase 
of the Phoenix missile system ($304 million) have increased the total 
cost of the F-14/Phoenix weapons system to $2.33 billion. As of the 
end of May 1976, ten aircraft had been delivered. An additional eight 
aircraft will be delivered before October 1, 1976, forty-two will be 
delivered in U.S. fiscal year 1977, and the remaining twenty by May 
1978. A recent decision to reduce the number of F-14 bases from three 
to two, Khatami and Shiraz, has lowered the total projected system 

Iran will probably operate five F-14 squadrons. By 1981, it is esti- 
mated that 6,500 personnel will be required to support the aircraft, 
of whom about 2,650 must be technically trained. 



Currently there are only 15 U.S. personnel working in Technical 
Assistance Field Teams (TAFT) on the F-14, two in Teheran and 
thirteen at Khatami Air Base in Isfahan ; an increase to 23 is planned 
for 1977. The number of official U.S. personnel is relatively small 
because of heavy contractor involvement. There are 353 contractor 
(Grumman, Hughes, and Pratt and Whitney) personnel in Iran asso- 
ciated with the F-14/Phoenix program, of whom 322 are presently 
located at Khatami Air Base. The existing contract for contractor 
support expires in 1978, with peak staffing of 800 in June 1977. Grum- 
man's contract, however, states that the company will maintain the 
aircraft until the IIAF is ready to take over. 

The original plan called for base construction, training and aircraft 
delivery to coincide. Overly optimistic target dates, and 9 to 12 month 
construction delays in base support facilities at Khatami Air Base, 
have significantly affected the overall schedule. For example, delays in 
constructing on-site training facilities have resulted in a backlog of 
200 maintenance personnel awaiting training. Grumman, as noted, esti- 
mates that self-sufficiency in in-country training and the phase-out of 
contractor personnel is two years away, but this is generally regarded 
as an extremely optimistic estimate. The need for external assistance 
is likely to extend into the 1980's. given the delays in nearly all aspects 
of the program except equipment deliveries. 

Producing pilots and weapons systems officers, i.e. flight crews, is 
likely to be an easier task for the IIAF than producing logistics and 
maintenance personnel because the IIAF is shifting some of its best 
F-5E and F-4 air crews into the F-14, which it considers its most 
prestigious program. 














2. F-4D/E: 

The backbone of the IIAF is the F-4 aircraft. Iran has purchased 
32 F-4D;s ($106 million), 177 F-4E's ($857 million), and 12 RF-4E's 
($143 million), all of which have been delivered except 36 F-^lE's and 
the 12 reconnaissance planes. The F-4D ? s are capable of delivering 
laser guided bombs. All of the F— iE's will have leading edge slats for 
increased maneuverability, some will be equipped for the Maverick 
air-to-ground missile, and others equipped with an electro optical 
target identification system. 


The F-4 program requires 11,000 personnel at the present time, 
increasing to about 25,000 by 1978 and leveling off thereafter. There 
will be a requirement for over 7,000 trained personnel in the air crew 
and maintenance categories by early 1977; projected manning, how- 
ever, is likely to be about 4.000, resulting in a gap of 3,000. 



Most observers report that combat readiness in the F^i is less than 
desired due to shortage of trained air crew and maintenance person- 
nel as noted above. The training program is hampered because of (1) 
a limited night and foul weather training program (2) a shortage of 
instructor pilots. In addition, some of the most highly trained person- 
nel are being diverted to the F-14 program. 


In the initial stages of the program, virtually all operational train- 
ing was done in the U.S. or by mobile training teams. The IIAF con- 
tinues to rely on the U.S. for instruction in new tactics or on new 
systems that are added to the aircraft, but otherwise is self-sufficient 
in operations. 

Maintenance and logistics support of the F-4D/E is very dependent 
on the U.S. personnel — MAAG, TAFT, contractor engineering tech- 
nical services, and USAF logistical command assets. Many of the 
complex maintenance skills must be purchased from USAF schools. 

There are 90 official U.S. personnel assigned to the F-4 program in 
FY 1976— three in the MAAG and 87 with TAFT's; the number of 
TAFT personnel is expected to decrease to 75 in FY 1977. McDonnell 
Douglas has 57 contractor personnel in Iran at the present time, most 
of whom will remain in FY 1977. This assistance will be required for 
several more years if the IIAF is to maintain its requisite number of 
flying hours and maintain operationally ready aircraft. 

S. F-5E/F Program: 

The U.S. had provided Iran with 104 F-5A and 23 F-5B fighter 
aircraft in the late 1960's and early 1970 ? s, largely under the grant 
military assistance program. Iran is replacing the A & B models with 
the 141 F-5E's ($377 million) and 28 F-5F's ($102 million), the two- 
place version which will serve as a trainer at the Combat Crew Train- 
ing Center at Vahdati Air Base. All of the F-5E's have been de- 
livered and the first F-5F will be delivered in August 1976. The F- 
5E/F fighter is relatively easy to operate and maintain. Because of its 
experience with the F-5A/B, the IIAF should be able to absorb the 
F-5E/F's with relative ease compared to the more sophisticated F-14 
and F-4 aircraft. The IIAF has eight F-5E squadrons. 


This program will require 6.000 personnel by 1978. The extent to 
which the F-5E program will be affected by the reported transfer of 
some of the best air crews to the F-14 program remains to be seen. 
As with the other IIAF programs, the most critical shortage is trained 
technical personnel in the logistical and maintenance areas. 


The IIAF is heavily dependent on official and contractor personnel, 
despite the fact that the F-5E is a relatively easy to operate and 
maintain aircraft. The F-5E was introduced into Iran prior to qualifi- 
cation and delivery of much of the support equipment. Also, certain 


IIAF modifications precluded concurrent deliveries of spares, aero- 
space ground equipment (AGE ) and technical data. 

Thus MAAG, TAFT, and contractor personnel will be required for 
some time in the future to assist in providing maintenance and logisti- 
cal support for the system. The IIAF is also dependent on the USAF 
for the development and implementation of advanced air-to-air and 
air-to-ground tactics. 















4 .. 





Contractor . 


Mobile Training Team 


If. Improved Hawk (I -Hawk) : 

The IIAF has purchased 37 improved Hawk batteries, about 1,800 
missiles, and a related training and support package for a total cost 
of upwards of $600 million. 

This program is one of the largest and most complex of all programs 
undertaken by the Iranian military. In addition to the batteries them- 
selves, Iran has purchased an automated fire distribution system, a full 
depot maintenance capability for all ground support equipment, and 
a missile firing range. Over 1,000 buildings in 50 locations must be 
designed and constructed for the I-Hawk system at a cost of over $400 

Sixteen batteries and over 650 missiles have been delivered to date. 


The schedule calls for about 2,000 Iranians on the I-Hawk program 
at the present time, increasing to about 12,000 by 1981, most of whom 
must be technically trained. Trained manpower may be up to 2,500 
short of required levels by 1978-79. 


The IIAF, which purchased the I-Hawk in 1973 and received its 
first delivery in March, 1975, is having initial difficulties in operat- 
ing this system. This results from a number of factors, most notably 
construction delays, non-operational training equipment, lack of a 
formal on-the-job training program, allocation of qualified students 
to higher priority programs, and a faulty automated logistics system 
that has resulted in some instances in up to a year's delay in the sup- 
ply system. Spares adequate to support the batteries already delivered 
are in Iran, but the IIAF logistics system is slow in locating and pro- 
viding the spares to individual units. 


The I-Hawk problems remain, despite the assistance of over 200 
U.S. official and contractor personnel. Success in such a complex pro- 
gram depends on a phased integration of site construction, person- 


nel training and system delivery. As noted earlier, there are serious 
delays in the first two of these areas. 

Unless there is a stretchout in virtually all aspects of the program. 
it may fail. Alternatively, it could take nearly 1,000 U.S. technicians 
to ensure operational status for all I-Hawk sites following completion 
of the necessary construction. 


1973 1974 1975 1976 1977 

MAAG 2 2 2 2 14 

TAFT 58 63 

Contractor 116 150 254 

MICOM 9 24 

Total 2 2 118 219 355 


The IIAF has clearly purchased the most advanced equipment 
which has prestige and deterrent value, although it is highly question- 
able whether such systems, particularly the F-14 and I-HAWK, will 
be effectively operating before the early to mid-1980 ? s. 

This acquisition pattern extends to support systems as well. The 
anticipated IIAF purchase of Project Peace Log (a program to de- 
velop a functional logistics organization costing $300-$500 million 
dollars over a number of years) will require about 14,000 Iranian per- 
sonnel by 1981, many of Avhom will require technical training, and up 
to 460 U.S. contractor personnel working in line jobs in the Iranian 
logistics system until the entire 14,000 Iranians are trained and on 
duty. That the Iranians need an effective logistics system is obvious. 
Nevertheless, the Iranians selected the largest, highest cost option pre- 
sented to it by the U.S. Air Force. Given Iranian difficulties in recruit- 
ing trained personnel, the U.S. contractor is likely to be directly in- 
volved for a long period of time. 

There have been slippages in nearly all major programs due to 
shortfalls in training, construction, and maintenance and logistical 
support. As a result of the shortage of trainable personnel and other 
training delays, already-trained personnel are being shifted from 
their current programs to those of higher priority, e.<r. trained air 
and maintenance crews from the F-5E to the F-14. The impact of 
this "poaching 7 ' on the lesser priority programs remains to be seen. 
Similarly, the better new personnel are likely to be assigned to the 
prestige programs, engendering further delays in programs such as 
I-Hawk, which are immensely complicated, but apparently of lesser 

In conclusion, self-sufficiency is not attainable in the foreseeable 
future, even if the IIAF makes no additional major purchases. Con- 
tinued U.S. involvement, and a concomitant dependency of the IIAF 
on the U.S. is unavoidable until the mid-1980's. New purchases will 
further exacerbate the problems. 

If the IIAF, the Shah's primary interest, faces these difficulties in 
surmounting manpower and infrastructure limitations, other pro- 
grams that must compete for limited human and financial resources 
will probably experience even greater problems. 


A. U.S. Citizens in Iran 

Estimating the number of T7.S. citizens in Iran is difficult because 
of the lack of hard data. The U.S. Embassy estimates that there were 
15,000-16,000 U.S. citizens in Iran in 197:>, and about 2-1,000 at the 
present time; it expects an increase to 33.000 to 35.000 by 1980-81. 
The Embassy projection for 1980 seems to be extremely conservative, 
since the ARMISH-MAAG projects contractor personnel on existing 
military projects alone to be 11,000 by 1980, or 36,000 including de- 
pendents. The key point is that the trend line is sharply rising, and 
many informed observers believe the number may reach 50,000-60,000 
by 1980. It could go higher if Iran purchases more sophisticated U.S. 
military and civilian products over the next few years. 

After 1981, the Embassy expects the U.S. population to level off 
and begin to decline as civil and military projects are completed and 
greater numbers of trained Iranians enter the work force. Assuming 
no major new programs, the population trend line will certainly fol- 
Ioav this pattern, but it is unlikely to decline very rapidly after 1981. 
The schedules for many projects have already slipped two to three 
years. Although there are varied reasons for such delays, one of the 
most frequently cited is the lack of trainable and trained indigenous 
manpower. There is no evidence that the supply of trained manpower 
will increase sufficiently to recoup these slippages; in short, U.S. per- 
sonnel are likely to be required in large numbers for several years 
longer than is currently estimated. 

About two-thirds of the Americans in Iran are located in Tehran. 
This percentage should decrease given Iranian efforts to develop in- 
dustry in other areas of the country. In the future, more Americans 
will probably be located in Isfahan, Shiraz, Bandar Abbas, Bushehr 
and Tabriz. 

For comparative purposes. U.S. Embassy estimates of other skilled 
foreign populations in Iran at the present time are : 

British 6, 000-7, 000 

German 6, 000 

French 5, 000 

Russian 5,000 (partly emigre) 

Japanese 2, 000 

Pakistani 2, 000 

Indian 2, 000 

South Korean 1, 500 

Philippine ? 

Most of these national groups are also expected to increase rapidly. 


The official U.S.-Iranian military relationship dates from World 
War II when the first U.S. mission went to Iran. The evolution of 
these missions from 1943 to the present is discussed in this section. 

































a. GEN MI SB: 

The United States and Iran signed an agreement on November 27, 
1943, establishing the U.S. Military Mission to the Imperial Iranian 
Gendarmarie (GENMISH) . The purpose of the Mission was to advise 
and assist the Ministry of Interior of Iran in the reorganization of 
the Gendarmarie and to advise on organizational and training matters. 
The initial agreement was for two years and was extended on an 
annual or biennial basis until the organization was deactivated on 
March 21, 1976. Selected GENMISH personnel figures for the 1954- 
1976 period are as follows : 

Military Civilian Tota 












A second component of the official U.S. presence is the U.S. Army 
Mission Headquarters or ARMISH. The agreement establishing the 
ARMISH was signed on October 6, 1947. Its function was to work 
with the Ministry of War to enhance the effectiveness and efficiency of 
the Iranian Army. This agreement has been extended regularly since 


The Military Assistance Advisory Group (MAAG) was established 
pursuant to an agreement in May 1950, to enable the U.S. to discharge 
its responsibilities for administering the grant military assistance 


In 1958. the United States decided to consolidate the ARMISH and 
the MAAG into a single organization entitled ARMISH-MAAG. The 
consolidation was completed in 1962. In recent years ARMISII- 
MAAG's primary functions have been (1) to advise the Iranian 
Armed Forces, primarily Vice Minister of War General Hassan 
Teufanian, on weapons procurement; (2) to process government-to- 
government (FMS) sales; and (3) to assist Iran in assimilating 
equipment purchased from the U.S. ARMISH and ARMISH- 
MAAG authorized personnel levels since 1956 are as follows: 

Military Civilian Total 














































Military Civilian Total 



































i NOTE: Year the ARMISH and MAAG consolidation was completed. 

d. TAFTs: 

The idea of TAFTs (Technical Assistance Field Teams) origi- 
nated in 1969 to provide in-country instruction to foreign personnel 
on specific equipment, technology, weapons and supporting systems on 
a scale beyond the scope and capability of mobile training teams 
(MTT's) and normal training programs. The initial concept resulted 
from the perceived problems that Iran would have in assimilating the 
F— i aircraft. The concept was tested by sending 43 personnel to Iran 
to assist on the F-4 program. 

When (1) the Iranians requested that the U.S. agree to increase 
the quantity and quality of its military sales on 1972, and (2) the 
U.S. responded favorably during the May 1972 visit of President 
Nixon, it became apparent that Iran would require substantial help 
from U.S. technicians in order to incorporate successfully the pro- 
jected purchases into its forces. At that time there was also consider- 
able pressure from the Congress to reduce the size of overseas 
MAAG's. To both assist Iran and to avoid increasing the size of 
ARMISH-MAAG, the U.S. Government signed a TAFT contract 
with GOI in January 1973 for 552 personnel at a cost of $16.6 million. 

The Department of Defense currently makes a conceptual distinc- 
tion between ARMISH-MAAG and the TAFTs, namely : 

—That ARMISH-MAAG is concerned with advisory and staff 
functions of a continuing nature whereas the TAFT's are "short- 
term" teams focusing on the introduction of new equipment and 
associated logistics systems, i.e. "train the trainers." 

— That Iran pays all expenses associated with the TAFT's and 70% 
of the cost of the MAAG. 

— That the MAAG is largely located in Tehran whereas 40% of the 
TAFT's are located elsewhere in the country. 
These distinctions arc generally valid, but it should be noted that in 
the 1950's and early 19G0's, when MAAG strengths were generally 
larger worldwide, a large number of MAAG personnel performed the 
same tasks currently assigned to the TAFT's in Iran. 

The "short-term" description of the TAFT's in Iran also needs clar- 
ification. While any specific TAFT job or function may last only two 
or three years we were told that new TAFT's will be constantly re- 
quired over the next five to ten years if the major U.S. military pro- 
grams in Iran are to succeed. Logistical and maintenance support for 
major systems appears to be a primary area in which the TAFT's will 
continue to play an essential role. 

The Government of Iran pavs for all direct and indirect costs of 
the TAFT's, including: 


— Personnel pay, allowances, and retirement ; 

— Special training to meet requirements peculiar to TAFT assign- 
— Transportation ; 

— Administrative costs associated with TAFT. 

TAFT personnel levels and the dollar value of FMS support cases 
are as follows : 

Year Number (millions) 

CY 1969/72 43 ... 

CY 1973 552 $16.6 

CY 1974 (FY 75) 663 17.2 

FY 1976 (15 months) 868 93.4 

FY 1977 (est.) 825 120. 


At the present time over forty U.S. companies have personnel in 
Iran to work on military contracts. By far the largest operations over 
the next several years will be those of Bell Helicopter International 
(Army Aviation) and the Grumman Aircraft Corporation (F-ll) 
in Isfahan. Each company expects to have over 2,000 employees and 
dependents in Iran. A July 1975 study estimated contractor personnel 
in Iran as follows. 





Contractor. . .. ... .. 








.... 3,693 

25, 000 



36, 000 

The best estimate as of October 1, 1975 was that the forty-four firms 
employing 2,941 personnel were operating in Iran. Sixty percent of 
these personnel were located in Tehran. Their geographical distribu- 
tion is as follows : 

Tehran 1, 758 

Isfahan 836 

Bandar Abbas 163 

Shiraz S2 

Sharobi 53 

Masjid-e-Soleman 23 

BuKhehr 10 

Tabriz 5 

Vahdati 4 

Bandar Pahlavi 1 

Total 2, D41 

A detailed list of U.S. companies and their personnel in Iran in 
October 1975 is at Annex B. A large and growing number of these 
contractor personnel are retired U.S. military, estimated as follows: 






Retired U.S 

















With over 1,200 currently authorized spaces, the DOD operation in 
Iran is by far the largest U.S. security assistance program in the world 
in terms of personnel. The ARMISH-MAAG and the TAFT account 
for a large part of the DOD total : 

1972 1973 1974 1975 1976 1977 (est.) 

Authorized MAAG 272 208 208 209 209 209 

Authorized TAFT 43 552 552 663 868 825 

Total 315 760 760 872 1,077 1,034 

Assigned DOD personnel in Iran, including those assigned to the 
Embassy, for three representative periods is as follows : 

June 1973 June 1974 February 1976 

Military 750 993 1,176 

Civilian 111 163 259 

Dependents ? ? (1,941) 

Total DOD 861 1,156 1,435 

Total DOD plus dependents ? ? 3,376 

B. Socio-Ecoxomic Change 

Iran's military programs are having a profound effect upon the 
socio-economic development of the country and will continue to do so 
for many years to come. 

The growing requirements for trained military personnel means that 
thousands of young Iranians are being taught skills that have wide 
application throughout the economy as a whole. Furthermore, the 
decision by the Iranian government to use English rather than Farsi 
as the basic language for most skilled military operations means that 
virtually every young Iranian officer and many of the NCO's will have 
a reasonably proficient command of English. Aside from the economic 
and operational benefits of English as a primary language, it is a tell- 
ing indicator of the degree and extent of the Iranian commitment to 
the United States as its primary supplier and friend. 

In addition to creating new skills the military programs are also 
helping to develop entire new communities in sparsely populated re- 
gions of the country. For instance, the rapid growth of Bandar Abbas, 
which may reach a population of 500,000 within a decade, and the 
potential growth of the Chah Bahar base complex on the Gulf of Oman 
are, or are likely, to result in the development of basic infrastructure — 
roads, water supply, electricity, ports, houses, communications — which 
will have socio-economic effects far beyond the military needs of the 
bases. The physical growth of these bases may, in turn, act as a catalyst 
for population redistribution and industrial growth. 

The development of ("hah Bahar may have a direct impart on the 
long-term political stability of southern and southeastern Iran, which 
includes large numbers of Baluchi tribesmen. Many Iranians are con- 
cerned about potential instability in this area. If sizeable numbers 
of Americans were involved in construction programs in this area 
there could be additional problems relating to the safety of American 
personnel in Iran. 


In order to understand the primary motives determining the supply 
of U.S. arms to Iran, a review of the U.S. arms sales process both in 
theory and practice is necessary. In this section the "normal" roles of 
the most important U.S. actors will be considered followed by a review 
of what actually happened in the case of major arms sales to Iran. 

A. The Arms Transfer Process (General) 

The United States does not have a world-wide "arms transfer pol- 
icy;'- therefore, there are no general clear-cut guidelines for those 
charged with implementing arms transfer programs on a day-to-day 
basis. In fact, policy-level officials believe that a general arms sales 
policy is not feasible and is unwise. They view arms transfers as an 
instrument of U.S. foreign policy toward specific regions and coun- 
tries, and argue that the issue to be addressed is U.S. foreign policy 
toward such regions or countries and, secondarily, the role of arms 
transfers in support of that policy. In their view, arms sales should 
not be extracted from the overall policy equation and examined as an 
independent variable. 

Officials who authorize military sales tend to base their decisions on 
perceived short-run political, military and economic benefits. Longer- 
term implications are often not taken into account. 

1. the president 

The President has the authority to participate in or make any deci- 
sions he deems to be of sufficient importance to merit his attention. 
When a particular arms sale is of paramount importance to U.S. inter- 
ests, the President will be directly involved, e.g. President Kennedy's 
decision to sell Britain the Polaris missile or President Ford's reported 
personal participation in sales decisions to Israel. However, normally 
he does not make decisions on individual sales, or even the total sales 
level to recipient countries. The President's involvement in arms sales 
is usually, therefore, indirect. He may, for example, decide to pursue 
policy x or policy y toward a given region or country based on options 
and analysis presented to him following interagency review, a Na- 
tional Security Study Memorandum (NSSM), in the NSC system. 
His decision, based on an NSSM, is set down in a National Security 
Decision Memorandum (NSDM), which then becomes policy. The 
NSDM guides the bureaucracy in implementing policy and would 
probably affect subsequent arms sales decision. For example, the cur- 
rent Executive Branch study on the Persian Gulf may result in a 
Presidential decision affecting arms sales to countries of the area. 

Another area of Presidential involvement is in the annual budget 
process. Based on material presented to him by the Office of Manage- 
ment and Budget, the President determines the levels of grant and 
credit military assistance to major recipients. Although the President 



does not usually decide, in the budget review, on the items to be sold, 
his budget decisions may influence subsequent sales decisions by the 


The State Department is charged with formulating U.S. foreign 
policy, including policy on foreign military sales. Policy guidance 
regarding arms transfers to specific countries or regions varies as to 
specificity and clarity. 

The State Department tends to view arms transfers almost exclu- 
sively in a political contact. When a country indicates that it wants 
to purchase a weapons system, State's primary concern is usually the 
impact that the U.S. response — favorable or unfavorable — will have 
on U.S. relations with that country and its immediate neighbors. There 
is often an unstated bias toward a favorable response unless there are 
specific reasons for refusing to sell. Criteria for evaluating requests 
for arms transfers, e.g. impact on regional arms balances, level of 
technology to be transferred, cost, etc., are applied to requests on a 
case-by -case basis, but the rigor with which they arc applied often 
depends on the perceived importance of the prospective purchaser and 
its neighbors. 

Specific policy guidance on arms transfers is more likely to exist 
for countries and regions where arms transfers are not perceived to be 
central to U.S. foreign policy. For many years the U.S. refused to 
sell supersonic jet aircraft to Latin America and. indeed, today it will 
not sell the F— i or comparable aircraft to countries in that region. 
Similar policy guidance has been promulgated for African countries, 
but no such guidance exists for most other areas where sales are 
usually reviewed on a case-by-case basis. 

The State Department has divided all countries eligible for military 
sales into two groups : 

— Category 7 A countries are those to which the DOD may sell defense 
articles and services without referral to the State Department for 
policy guidance; countries in this group are the Western indus- 
trialized countries, e.g. most of NATO, Japan. Australia. 

— Category B countries are those whose requests for purchase of de- 
fense articles & services must be cleared by the State Department. 
Because these sales must be referred to State, those with policy 
responsibilities in DOD, e.g. the Office of the Assistant Secretary 
for International Security Affairs, also review them. 

Aside from the Secretary of State, authority in the State Depart- 
ment for approving arms sales is dispersed. Nominal authority is dele- 
gated to the Under Secretary for Security Assistance (U/SA) for 
government -to-government sales and to the Bureau of Political-Mili- 
tary Affairs, Office of Munitions Control (PM), for issuing licenses 
for commercial sales. Because arms sales are viewed primarily in a 
foreign policy context, those charged with overall policy responsibility 
toward specific countries or regions, the regional bureaus, also play 
a major role. 

The regional bureaus report to the Under Secretary for Political 
Affairs. The bureaus, given their policy responsibilities, tend to view 
anns transfer decisions in a bilateral political context. They usually 


have little expertise on the technical military aspects of proposed 

U/SA and PM are more likely to examine the military implications 
of proposed transfers ; they also have more direct contact with those 
offices in the DOD with similar responsibility for arms transfers, 
namely, the Defense Security Assistance Agency, and within the office 
of International Security Affairs, the regional and desk officers, Policy- 
Plans, and Strategic Trade and Disclosure. The U/SA relies primarily 
on the Security Assistance and Sales Office in PM for staff advice on 
government-to-government sales, and the Office of Munitions Control 
for advice on commercial licenses. 

The relative influence of these offices in determining outcomes varies 
depending (1) on the issue to be decided and (2) the status within the 
Department of the persons holding the key offices. 

In general, the more important an arms transfer decision to U.S. 
foreign policy toward a given country the greater the influence of the 
views of the regional bureaus and the Under Secretary for Political 


The Defense Department, as an entity, sometimes does not take 
positions on arms transfer policy issues (1) because it tends to defer 
to the State Department (particularly if there is a strong Secretary 
of State) ; and (2) because the diversity within the DOD makes it 
difficult to develop a unified policy position on important issues unless 
the Secretary or Deputy Secretary are personally involved. 

The key offices within the Office of the Secretary of Defense (OSD) 
dealing with arms sales are the Assistant Secretary for International 
Security Affairs (ISA) and the Defense Security Assistance Agency 
(DSAA). The Director of DSAA is also Deputy Assistant Secretary 
for Security Assistance in ISA; thus the occupant has both policy- 
making and policy-implementation responsibilities. 

The relative influence of these factors varies from issue to issue but 
on day-to-day matters the most influential has been DSAA. DSAA has 
overall responsibility for the management of all foreign military sales 
(FMS) decisions. The Director has direct access to the Secretary/ 
Deputy Secretary. DSAA has control over all data relating to pend- 
ing arms sales negotiations, the status of arms deliveries, and pay- 
ments for arms sales and is also fully involved in all intra-DOD and 
interagency decisions on arms sales. In short, the Executive Branch 
and the Congress rely on DSAA for information concerning all but 
the most political and sensitive FMS agreements. DSAA, ouite apart 
from its delegated authoritv, is therefore, in a unique position to be 
well informed on and to influence all aspects of arms transfer policy. 
DSAA personnel have access and close day-to-dav relations with the 
military services, the State Department and the Cono^ess, unlike any 
other cnHtv within the DOD on arms sales matters. Thus DSAA has 
considerable influence, particularly if overall policy guidance on arms 
sale^ is lacking, is not clear, or is not periodically reviewed. 

Although the Director of DSAA (wearing his ISA hat) formally 
must report to and through the ASD/TSA on policy matters, the dis- 
tinction between policv and implementation is necessarily ambiguous. 
With direct access to the Secretary/Deputy Secretary, the Director of 


DSAA has tended to emphasize his DSAA rather than his ISA role 
as Deputy Assistant Secretary for Security Assistance. 

In theory, the military services do not have a major role in arms 
transfer decisions. Their role is limited to executing and implement- 
ing decisions within policy guidance promulgated by others; a few of 
their responsibilities are : 

— Provide data on price, availability and lead time : 
— Provide technical military advice to OSD, the JCS, the Unified 
Commands and the MAAG's on weapons systems, tactics and doc- 
trine, training and logistics support ; 
— Conduct training, and prepare and deliver articles and services; 
— Within policies and criteria established by ASD/ISA and under 
the direction of the Director, DSAA. execute sales agreements for 
approved programs. 
The regional bureaus in ISA used to play a major role in arms trans- 
fers but their influence in this area has, with some exceptions, declined 
coincident to DSAA's rise. The bureaus maintain contact with the 
corresponding regional bureaus in State and their interests tend 
to correspond. 

B. Roles of the Executive Branch Departments in Arms 
Transfers to Iran 

1. the president 

President Xixon personally informed the Shah during his May 
1072 visit to Tehran that the U.S. would sell either the F-14 or the 
F-15 to Iran. A subsequent memorandum informed the bureaucracy of 
this decision and stated that, in general, future decisions on other 
requests for conventional weapons should be made by the Government 
of Iran. Whether the President communicated this second decision to 
the Shah during the visit to Tehran is not known. 

The President's decision to sell Iran virtually any weapons system 
it wanted was unprecedented for a non-industrial country: there was 
apparently no major interagency review of arms sales to Iran prior 
to the visit. 

The decision not only opened the door to large increases in sales to 
Iran, but also effectively exempted sales to Iran from the normal arms 
sales decision-making processes in the State and Defense Departments. 
Insofar as is known, the May 11)72, derision has never been formally 
reconsidered, even though the large oil price increase in 1973 enabled 
Iran to order much more than anyone anticipated in 197*2. 


The State Department accepted the President's decision and pro- 
ceeded to implement it. In practice this meant that Iranian arms re- 
quests received little or no scrutiny unless they involved highly classi- 
field technology, or co-production (licensed assembly and fabrication 
of some parts) in Iran. Detailed analysis of such factors as Iranian 
military requirements, absorptive capacity, and manpower availability 
was considered to be superfluous, given the sweeping nature of the 
President's decision. 

As a result of the dramatic inerense in oil prices in 197o, Iranian 
orders increased from $808 million in FY 1971 and S.V24 million in 


FY 1972, to $2.1 billion in FY 1973, $3.9 billion in FY 1974, and $2.6 
billion in FY 1975. It became clear that Iran intended to apply a large 
portion of its new wealth to a massive expansion and modernization 
of its military establishment. 

At the staff level within State there Avas concern about the long- 
range implications of an unlimited sales policy to a country with such 
large financial resources, but attempts to raise this concern to policy 
level officials were not successful. Those who were in position to know 
state that the senior officials of the department did not want to re- 
examine current policy. 

Co-production requests were an exception. The staff of the Depart- 
ment's Bureau of Political-Military Affairs, with support from the 
Office of Management and Budget, initiated a review to develop cri- 
teria for evaluating the increasing number of co-production requests 
from Iran, e.g. Maverick and TOW missiles. Congressional concern 
about the impact of co-production on domestic U.S. employment, as 
expressed in Section 42(b) of the Foreign Military Sales Act, served 
to support this effort. The review led to the establishment of an inter- 
agency review procedure for such requests ; it is too early to evaluate 
the effectiveness of the review procedure. 

If senior officials in the State Department were concerned about 
reports in the last two years that Iran was experiencing problems in 
absorbing the equipment it had purchased, it was certainly not evident 
in their public and semi-public statements about Iranian military pro- 
grams and the U.S. involvement. The evidence indicates that the State 
Department has not formally reviewed U.S. arms sales policy to Iran 
since the 1972 decision and continues to support it wholeheartedly. 


The role played by the DOD with regard to arms transfer policy 
towards Iran has varied since 1972 — sometimes reflecting competing 
interests within the DOD and other times reflecting the different time 
frames during which different factions first became aware of major 
problems with Iran programs. 

Secretary Schlesinger and, to a limited degree, Deputy Secretary 
Clements were personally involved at various times. Other elements of 
the Office of the Secretary of Defense (OSD) that played major roles 
were the Defense Security Assistance Agency (DSAA) and the Office 
of the Assistant Secretary for International Security Affairs 
(ASD/ISA). The Office of Program Analysis and Evaluation 
(PA&E) was concerned about the military implications of large arms 
transfers to Iran and the growth of the U.S. population in Iran but 
did not play a major role. Outside of OSD the most important actors 
are the three military services and ARMISH-MAAG. 

The 1972 sales decision coupled with the increase in Iranian revenues 
following the quadrupling of oil prices created a situation not unlike 
that of bees swarming around a pot of honey. Defense industries, both 
U.S. and foreign, rushed to Iran to persuade the Government to pro- 
cure their products. Each of the U.S. services, on occasion, sought 
to persuade Iran to buv its weapons, in part because a large Iranian 
"buy" of an item in a U.S. service inventory could (1) reduce the per 
unit costs to that service and (2) enable the service to recoup some 
of its prior investment foi research and development. 


On occasion this resulted in fierce sales competition between the U.S. 
services. For example, following the decision to sell either the F-14 or 
F-15 aircraft, the U.S. Air Force and the U.S. Navy entered into an 
intense competition to sell their respective aircraft. The Navy was 
particularly eager to sell the F-14, given its contract problems with 
the Grumman Corporation and rapidly rising costs. 

The military services' contact with the host country on new sales 
is nominally to be through Unified Command and MAAG channels, 
following consultation with ISA and DSAA. The services, however, 
often worked (1) with contractors who had direct access to the Iranian 
military, or (2) through the service sections in the MAAG, without 
regard to the appropriateness of the systems they were selling to Iran, 
Iranian absorption capabilities, or inter-service tradeoffs. 

DSAA, having day-to-day control over major arms sales negotia- 
tions and a close relationship with both the services and the contrac- 
tors, also played a major role in sales to Iran. 

Since a primary function of DSAA is to execute sales programs con- 
sistent with policy guidance, and such guidance with regard to Iran 
dictated a positive response to most sales requests, DSAA also played 
a salesman's role. The 1972 Presidential decision coupled with the 
Iranian appetite for arms unleased commercial and official arms 

By 1975, however, problems associated with the implementation of 
policy had become serious. Those responsible for implementing policy, 
i.e. DSAA, the Services, the Embassy, and the MAAG, stated, justifi- 
ably, that they were carrying out the policy directive of the President 
and Secretary of State. DSAA's job is not to review policy. Never- 
theless, in early to mid-1975, DSAA became sensitive to attempts by 
others within the DOD to surface the problems of implementation and, 
indirectly, question policy. This was due to two somewhat different 
reasons. First — the one cited above — DSAA could claim that the Presi- 
dent and Secretary of State had determined U.S. policy toward Iran. 
Second, any challenge to current policy within the DOD could be 
interpreted as a challenge to the power and authority of DSAA. 

The Near East and South Asia (NESA) region of ISA has primary 
responsibility for formulating DOD policy in the Middle East and 
South Asia. It maintains close liaison with the Near East Bureau in 
the State Department and other offices in the DOD who have direct 
interests in the region. However, NESA was not in a position during 
the 1974—75 period to challenge seriously prevailing policy or the re- 
sultant arms sales activities of the services, DSAA and the contractors, 
even though there were those in NESA who were becoming increas- 
ingly concerned about that policy. Iran, for example, was never added 
to the list of Middle East countries whose military requests were 
regularly reviewed by the Middle East Task Group (METG), chaired 
by the Deputy Assistant Secretary of Defense/NESA. The METG 
was initially created to review military sales to Israel and the Arab 
countries. The membership of the METG includes representatives 
from all major offices within DOD, including DSAA. Major requests 
for weapons purchases from METG countries received careful 

The Office of Policy Plans and NSC Affairs in ISA, with the en- 
couragement and support of the ASD/ISA and his Principal Deputy, 


undertook in early 1975 a mid-to-long term policy analysis of U.S. 
arms transfers toward the Middle East. This study recommended that 
an immediate review of U.S. Persian Gulf policy be undertaken, 
focusing on the political and strategic benefits and costs in various 
time frames of current U.S. policy. 

About the same time, in May 1975, the NSC directed a review of 
overall U.S. arms transfer policy to be completed by June 25, 1975. 
Many of those involved in the project came to believe that the senior 
XSC officials were not interested in a serious analysis of arms transfer 
issues or an in-depth examination of the nuances and implications of 
U.S. arms transfer policies to the Middle East and Persian Gulf areas, 
the focal points of the study. 

Although the mandate and scope of this study was subsequently 
expanded to permit a wider and more analytical review of policy, 
endless disagreements delayed the response; a formal submission to 
the XSC has still (June 197(3) not been made. 

The checkered history of this review is illustrative of the growing 
diversity of opinion on arms transfer issues within the Executive 
Branch. Several factions had emerged within the DOD. The "critics" 
of current policy (i.e. those calling for a major review of policy) had 
differing motivations. Some (ISA-Policy Plans, ISA-NESA and 
PA&E) argued that the long-term military and strategic consequences 
of the Iranian EMS program needed more careful analysis. Others 
more directly involved in implementation of sales were critical be- 
cause of the impact of Iranian and other Middle East amis sales on 
the U.S. armed services. The Joint Chiefs felt that the draw-down of 
U.S. inventories for the Middle East was impacting adversely upon 
the readiness of the U.S. military. The three military services were 
becoming aware of the impact of arms transfers upon their own man- 
power requirements as they realized that more uniformed personnel 
would be required to help FMS recipients absorb the large quantities 
of arms they were buying. The Installations and Logistics (I&L) 
branch of OSD was becoming very sensitive to the long-term problem 
of providing spare parts and general support for the burgeoning sales 
programs (most large FMS recipients participate in the integrated 
U.S. logistics systems, as though they were U.S. service customers). 

In contrast to the DOD "critics" during the 1972-early 1975 period, 
DSAA tended to support existing U.S. arms transfer policies. 

a. Role of the Secretary of Defense and the Assistant Secretary for 
International Security Affairs 

Throughout the 1973-75 period, different attitudes on the Iranian 
question were emerging from these important offices. It seems clear 
that Secretary Schlesinger and Assistant Secretary/ISA Ellsworth 
were becoming increasingly skeptical about the management of Iran's 
FMS programs and therefore more concerned about the impact of 
future sales. 

Secretary Schlesinger has stated that, during his tenure of office, 
lie perceived a general problem with respect to U.S. arms sales 
policy — namely, that the boom in the arms market provided major 
incentives for U.S. industry and the armed services to push sales 
which, in time, might result in the dumping of unnecessary and very 
sophisticated equipment upon unsuspecting recipients. This, he felt, 
would lead to problems of resource allocation and assimilation for the 


recipient, potentially eroding long-run confidence in the DOD as the 
main agent for U.S. arms sales. Li the case of Iran, this could raise 
serious policy questions regarding the credibility of the United States 
Government If Iranian defense resources were badly allocated, the 
operational effectiveness of its forces would be downgraded with ad- 
verse effects upon the regional security posture. 

Schlesinger expressed his view that the DOD, and OSD in par- 
ticular, should act as an "honest broker" between the GO I and U.S. 
industry, fending off the inherent pressures from the U.S. services and 
industry to sell sophisticated arms, regardless of whether Iran needed 
or could handle them. Schlesinger has stated that he wanted to ensure 
that would-be recipients of U.S. arms be given complete briefings, i.e.. 
be told what it takes to utilize a given system effectively, including 
potential problem areas. This procedure, he believed, would at least 
give the U.S. the option of saying "you were warned" if things did 
begin to go wrong. 

In late 1973, Schlesinger briefed the Shah on some of the implica- 
tions of buying sophisticated U.S. hardware. In response to the Shah's 
request for assistance, Schlesinger sent Richard Hallock, a retired 
Army Colonel to Iran as his unofficial representative, on a consultant 
basis (ARPA contract). Hallock was to report directly to the Secre- 
tary, or indirectly through Martin Hoffman, then General Counsel of 
the DOD, Admiral Ray Peet, former Director of DSAA, or his suc- 
cessor, General Howard Fish. 

AVe understand that Hallock's role was ( 1 ) to provide the Shah and 
General Toufanian with independent analyses on weapons procure- 
ment and (2) to keep Schlesinger informed of the Shah's views and/ 
or problem areas as they developed. It was apparently Schlesinger's 
hope that Hallock's advice to the Shah might serve as a counterweight 
to the hard sales tactics of industry and. on occasion, the services. 

Hallock operated outside of the DOD chain of command, in part 
because he and the Secretary suspected that some DOD components 
may be functioning primarily as salesmen rather than advisors. 

Hallock established a close relationship with the Shall, General 
Toufanian, senior U.S. Embassy officials, and other Embassy officers 
concerned with military programs. The Government of Iran appar- 
ently developed a high sense of confidence in Hallock's advice while 
Hallock simultaneously provided Schlesinger with reports on what the 
contractors, services and the MAAG were doing in Iran. 

At the same time that Schlesinger was reviewing reports on condi- 
tions in Iran from Hallock, Robert Ellsworth. Assistant Secretary of 
Defense for International Security Affairs, was also becoming aware 
of problems in Iran. With Schlesinger's approval in March 1975. he 
appointed a Special Assistant for Iranian Affairs in ISA to examine 
DOD activities in Iran. 

The Special Assistant's first task was literally to find out what was 
happening in Iran. He worked for six months with a small stall' and 
prepared a report, for Ellsworth. The report was not made public and 
not distributed within the DOD. Informed sources have stated thai 
the report recommended that an office be created within ISA to deal 
exclusively with Iran. Secretary Schlesinger subsequently sent a 
memorandum to the President that, we understand, reviewed DOD 
activities in Iran and noted DOD's concern over emerging manage- 
ment problems in the sales program. 


Schlesinger, it appear, finally decided against a proposed office in 
ISA to deal with Iran. For several months, he and Hoffman had felt, 
however, that a high ranking civilian, a Secretary of Defense repre- 
sentative, was needed in Iran. The Secretary during this period also 
consulted frequently with the Director of DSAA. 

The official selected was Eric von Marbod, a former Comptroller of 
DSAA and Principal Deputy Assistant Secretary (Comptroller) of 
OSD, who had been the DOD official in charge of the Vietnam with- 
drawal and the South Vietnamese refugee program. Approval was 
sought, and obtained, to send von Marbod to Iran in September 1975. 

b. Role of the Embassy* 

TVe were told that the U.S. Embassy in Tehran, which had worked 

closely with Schlesinger's unofficial representative TIallock, initially 

opposed the appointment of a Senior Defense Representative for the 

following reasons : 

— Concern that the appointment might lead to a more independent 

DOD operation in Iran ; 
— It felt that any effort to change arms policy or management 

thereof was the responsibility of the State Department ; 
— The Embassy felt that the key management and coordination 
problems were in Washington, not Tehran. Sending a Senior Rep- 
resentative appeared to be treating the symptoms rather than the 
The Embassy had strongly supported the 1972 policv decision, but 
Embassy officials felt that they were losing control of the situation in 
the 1973-75 period when the official and commercial salesmen flocked 
to Iran following the increase in oil prices. The Embassy did not feel 
that it was fully informed on what was going on, and may have sus- 
pected that some elements of DOD were cooperating with the contrac- 
tors in promoting sales. 

Embassy officials believed that the solutions to these problems had to 
come from the State and Defense Departments in Washington. In 
fact. Embassy officials sympathized with the plight of a two-star 
MAAG chief charged with coordinating the U.S.-Iran military rela- 
tionship while the Army, Navy, and Air Force were often pursuing 
their own objectives through the service sections of the MAAG. (See 
Annex C for details of official high level visits to Iran.) 

By early 1975, the Embassy perceived the emerging management 
problems but responsible staff officers did not feel that it was in their 
province to question basic policy guidance. We believe that they were 
reluctant because : 
— The Embassy may have operated on the assumption that senior 
officials in tlie State Department were not interested in informa- 
tion or opinions that questioned general policy toward Iran; 
— The views of successive MAAG chiefs apparently varied as to the 
extent of the problems associated with Iran ? s assimilation of the 
equipment it purchased ; 
— Everyone seemed to be basically pleased. The Government of 
Iran was getting the equipment it wanted; the State Department 
was happy because U.S.-Iranian relations were good ; DOD was 
actively selling in accordance with policy; the contractors were 
pleased because they were making money ; 

♦The authors regret that they were unable to schedule an Interview with the U.S. 
Ambassador to Iran, Richard Helms, due to mutually conflicting travel schedules. 


— The State Department had never been deeply involved in the 
management and implementation aspects of arms sales; the Em- 
bassy, with limited stall' resources, may have decided to devote its 
energies to higher priority interests of the Department. 
It is clear that the Embassy's primary concern paralleled that of 
its superiors in Washington — namely, preserving the good U.S.- 
Iranian relationship created, in part, by the 1972 decision. The Em- 
bassy's primary concerns about problems with military sales and 
program management seemed to be (1) that the Embassy be fully in- 
formed of what was going on, and (2) that DOD efforts to correct the 
situation be under Embassy control and be presented in a manner that 
could not be interpreted in any way by the Iranian Government as 
reflecting a change in basic policy. 

c. Role of the Defense Representative in Iran : 

The Embassy ultimately accepted the appointment of von Marbod 
and upon his arrival, Ambassador Helms told him that he had his 
full support. The MAAG was initially skeptical of the appointment 
because it interpreted the appointment of an official civilian repre- 
sentative who outranked the MAAG chief as a vote of no confidence. 
Mr. von Marbod arrived in Iran in September, 1975, on a one-year 
appointment with terms of reference which were carefully negotiated 
both within the DOD and with the senior State Department officials. 
Before leaving Washington von Marbod had discussions with Schles- 
inger, Ellsworth, General Brown, Chairman of the JCS, General 
Jones, Air Force Chief of Staff, and General Fish. He stopped at U.S. 
European Headquarters in Stuttgart on the way to Iran and met with 
General Huyser, Deputy Commander in Chief, and General Ryder, 
head of the Security Assistance Directorate. Shortly after Mr. von 
Marbod arrived in Tehran General Vandenberg, the chief of 
ARMISH-MAAG, was relieved of his post for unexplained reasons. 
He was replaced bv Air Force Major General Miles, who arrived in 
March 1976. 

The Defense Representative, having no staff or support upon ar- 
rival, sought to work with ARMISH-MAAG and allay its initial re- 
sentment over his appointment. This task was probably facilitated by 
the vacancy at the head of MAAG mission. Apparently he was suc- 
cessful, perhaps because he made a special point of working with the 
MAAG and reported through military channels to Washington, in 
direct contrast to Sehlesingers previous unofficial representative. 

The mission of the Defense Representative was (1) to identify prob- 
lem areas; (2) to recommend solutions; and (3) to see that DOD 
play the "honest broker'' role that the Secretary deemed critical to the 
credibility of the DOD and the U.S. Government. He was guided in 
his mission by the following considerations : 

— It was important that the Government of Iran carefully manage 
its defense resources given that oil revenues were (by 1975) not 
keeping up with defense costs; 
— That Iran's procurement decisions had led to problems of assimi- 
lation, burdening Iran's manpower and infrastructure resources; 
— That the U.S. should help the Iranian Government to reach deci- 
sions that will maximize return on its defense dollar and minimize 
associated burdens. 


Mr. von MarbooVs first and most important task was to ensure that 
the Iranian Government be fully informed on a routine basis about all 
perceived problems and constraints concerning the introduction of a 
new U.S. weapons system. 

His second task was to develop factual, objective presentations for 
review by the Iranian Government of actual or potential problem areas 
with systems already under contract, e.g. construction of support fa- 
cilities, manpower and logistics shortfalls, thus presenting the "com- 
plete picture" to the Government of Iran. While doing this, however, 
the Defense Representative had to make clear that procurement deci- 
sions were still the responsibility of the Iranians, and that his mission 
did not represent a change in basic U.S. policy. 

In this connection, Deputy Secretary Robert Ellsworth (promoted 
from ASD/ISA by the new Secretary, Donald Rumsfeld) issued a 
directive to all components of DOD on February 24, 1976 (1) outlining 
some of the problems encountered in implementing programs in Iran ; 
(2) stating that it is essential that all DOD components seek to achieve 
objectives similar to those outlined earlier in connection with the De- 
fense Representative; and (3) delegating to the Assistant Secretary 
for ISA primary responsibility for addressing policy issues, making 
recommendations for decision by the Secretary or Deputy Secretary, 
assuring effective policy coordination with the Department of State, 
and exercising policy supervision over, and coordinating security as- 
sistance with other DOD activities in Iran. The Ellsworth memo- 
randum was not intended to suggest a shift in basic U.S. or DOD 
policy toward Iran, but to ensure that all proposals were rigorously 
examined in DOD prior to submission to the Department of State. A 
thorough review would also generate the data needed to inform ac- 
curately the Government of Iran on all aspects and ramifications of 
systems it proposed to purchase. 

Ellsworth, who earlier had favored creation of an Office in ISA 
dealing exclusively with Iranian Affairs rather than sending a De- 
fense Representative to Iran, moved following Schlesinger's departure 
to establish such an office. Presumably this office will carry out the 
authority delegated to ISA in the February 24 directive. At the time 
of writing (June 1976) it is too early to evaluate its effectiveness. 

The Defense Representative has apparently had some success in his 
efforts to "routinize" security assistance programs in Iran. If the Ells- 
worth directive is implemented, programs will be adequately scruti- 
nized by the DOD in Washington, and communicated to the Govern- 
ment of Iran through the proper channel, i.e. the MAAG, and im- 
plemented by DSAA and the services in an objective manner. It should 
be noted that until very recently Richard Hallock, Secretary Schles- 
inger's unofficial representative in Iran until the appointment of Eric 
von Marbod in September, 1975, was employed, as a private citizen, by 
General Toufanian. He was apparently advising the General on weap- 
ons procurement matters. 


A. U.S. Interests and Iranian Security Policy 

The prevailing view within the Executive Branch is that the United 
States has a major interest in a strong, pro- Western Iran for political, 
economic and strategic reasons : 

— It is a large, populous, resource-rich country located on the pe- 
riphery of the Soviet Union and between the Near East and 
South Asia ; 

— The flow of oil from the Persian Gulf is vital to the economies of 
Western Europe and Japan and to a lesser extent the United 
States itself ; 

— A hostile presence or political instability in Iran or the lower 
Gulf region could threaten access to this oil : 

— U.S. trade with and investment in Iran is large and growing. 

The foregoing perception of U.S. interests combined with a policy 
decision by the U.S. in the late 1960's not to replace the British with 
a direct U.S. presence in the Persian Gulf, and Iran's desire to 
develop a deterrent capability to protect its own interests and oil life- 
line, are the factors that explain the positive U.S. responses to Iranian 
arms requests. 

However, the sweeping nature of the 1972 Presidential decision 
to permit the Shah to purchase without prior review led to problems, 
many of them unanticipated. The evidence indicates that the 1972 deci- 
sion was not reassessed following the oil bonanza in 1973 : apparently 
senior officials did not believe that the increase in Iranian oil revenues 
fundamentally changed the reasons for the 197*2 decision. Hence, the 
U.S. sought to avoid short-term negative political repercussions that 
might have resulted from occasional negative sales decisions at the 
cost of contributing to future problems associated with high levels 
of sales. The Executive Branch began to lose control of the situation. 

Since the late 1960's the U.S. Government has been both arms sales- 
man and adviser to Iran. These roles have not been easy to reconcile. 
ARMISH-MAAG was supposed to offer professional, neutral advice 
on arms acquisitions; at the same time the military services to whom 
ARMISH-MAAG reports and the civilian contractors, who are in 
frequent contact with ARMISH-MAAG personnel, had strong in- 
terests in selling weapons systems for their own purposes. Given the 
1972 decision, the salesman's role often predominated. 

One significant reason advanced by Executive Branch officials to 
explain U.S. policy is that since Iran had other sources of military 
supply and was a leader of OPEC, the U.S. should not confront the 
Shah concerning the difficulties that would be incurred in absorbing 
his proposed acquisitions. This attitude probably underestimated U.S. 
leverage with Iran, or rather, the importance that Iran placed on its 
relationship with the United States. There is no question that Iran 
would have purchased equipment from other suppliers if it determined 



that a given capability was vital and the U.S. refused to sell it. In the 
case of the F-14 and F-15, however, there were no comparable alterna- 
tives available. 

Iranian officials regard the relationship with U.S. as vital to Iranian 
interests. If Iran is attacked by the Soviet Union, they believe that the 
survival of Iran would be dependent on U.S. intervention; no other 
country has the capability or the will to assist Iran in this ultimate 
contingency. Thus Iran appears consciously to view the defense link 
with the U.S. as a form of insurance. Iran may, and has, purchased 
equipment from third countries, but it is very doubtful to most ob- 
servers that Iran would have risked its U.S. relationship had the U.S., 
as a good friend, openly and forthrightly given its unvarnished opin- 
ion on several of the proposed large-scale purchases. 

B. Policy Implications of U.S. Military Involvement in Iran 

Barring a dramatic change in Iran's leadership, the future course 
of the U.S.-Iranian military relationship is already being determined 
by the level of U.S. activity in the country. Iran has invested so heavily 
in American weapons and technology that through the early 1980's it 
will have to rely upon American maintenance and logistics support 
to the extent that most Iranian decisions regarding a major and sus- 
tained use of military power must inevitably take into account atti- 
tudes of the United States. 

The two most potentially difficult issues, that, in the future, may 
confront U.S. policymakers as a result of this relationship are: (1) 
what to do if the current programs run into further trouble and Iran 
requests an even deeper U.S. involvement and (2) what to do if, on 
the contrary, the Iranians are in a position to use sophisticated equip- 
ment effectively in combat and, in fact, do so. In both cases there is 
the potential for friction or serious tension in U.S.-Iranian relations. 

The first issue may arise if Iran is unable, over time, to develop the 
trained personnel and the support infrastructure to utilize effectively 
the large amounts of sophisticated military (and civilian) equipment 
that it has purchased. If the weapons systems do not "work," Iran 
may blame the United States for the fact that its equipment is not 
fully operational. 

It is necessary to be more precise about what is meant by "fully 
operational." Based upon the record to date, there seems to be no doubt 
that Iranians are capable, in time, of operating their current inventor} 7 
under normal "peace time" conditions. They will probably not operate 
most systems as effectively as would a similar U.S. unit, but it is their 
own definition of success that is important. There are questions, how- 
ever, as to (a) how well they would perfrom under "war time" condi- 
tions, and (b) how dependent they will continue to be upon active U.S. 
participation in the maintenance and logistical support of their equip- 
ment in both "peace time" and "war time" conditions. For example, 
informed U.S. personnel believe that it is unlikely that Iran could 
engage in major combat operations during the next five to ten years 
with its current and prospective inventory i.e. purchase to date, of 
sophisticated weapons (as distinct from some of the less sophisticated 
ground equipment) without sustained U.S. support. 

It will be recalled that Iran faces different types of threats to 
its security. In this report a distinction has been made between 
"high" and "low" intensity threats, or conflicts, and whether or 


not these threats or conflicts were likely to be of "long" or "short" 
term duration. If a further distinction is made between what 
might be termed "sophisticated" and "less sophisticated" American 
weapons, it follows that, at least for the next ten years, Iran has the 
possibility of engaging in "high" or "low" intensity conflicts for "long" 
or "short" duration using "sophisticated" or "less sophisticated" U.S. 
weapons. (For illustrative purposes the distinction between "sophisti- 
cated" and "less sophisticated" U.S. weapons is a function of the level 
of U.S. support required to make them operationally effective over 
the next ten years. Thus, the F-14/Phoenix system and the DD993 
Spruance class destroyer fall under the category of "sophisticated," 
whereas the C-130's and the Ml 13 armored personnel carrier would be 
classified as "less sophisticated.") 

From these simple definitions the following proposition can be 
suggested : 

The higher the level of intensity of conflict and the longer 
its duration, the greater the probability that "sophisticated^' 
U.S. arms will be used, thereby requiring direct U.S. support. 
Conversely, the lower the intensity of conflict and the snorter 
its duration, the lower the probability of the use of "sophisti- 
cated" U.S. arms and direct U.S. support. 
Between these two extremes are many other options, which, in 
all likelihood will be those to materialize over the next ten years. Iran 
can probably continue to fight insurgency-type wars (such as Oman) 
without direct U.S. participation but once the fighting requires the use 
of sophisticated U.S. weapons, the involvement of U.S. personnel be- 
comes unavoidable, if such weapons are to be used effectively. (It 
should be pointed out that the Defense Department Directive on Tech- 
nical Assistance Field Teams (TAFT's) states that: "TAFT person- 
nel will not engage in or provide assistance or advice to foreign forces 
in a combat situation. Additionally, they will not perform operational 
duties of any kind except as may be required in the conduct of on-the- 
job training in the operation and maintenance of equipment, weapons, 
or supporting systems.") 

At this point it is important to elaborate on what is actually meant 
by U.S. "involvement." This includes activities performed for the 
Iranian armed forces by uniformed or contractor personnel who par- 
ticipate in two types of roles : (1) advisory and managerial; (2) logis- 
tics and support. Each of these roles can involve either: (1) front line 
service with the Iranian military in the field or at Iranian bases ; or 
(2) a supporting role in Iran at rear bases and headquarters, or U.S.- 
based logistical support. 

From a political perspective, U.S. uniformed personnel actually 
helping the Iranians maintain F-4's and F-14's in day-to-day combat 
is quite different from providing long-term logistics support from the 
United States ; phrased differently, the greater the possibility of Amer- 
icans, especially uniformed Americans, being drawn into fighting, the 
greater the immediate political problems. 

Thus, while it is true that a "visible" U.S. involvement entails 
greater political risks, the less controversial but nonetheless real in- 
volvement resulting from a common logistics base also has important 
political and military implications for the United States. Although it 
is correctly assumed that the United States has less influence over the 
choice of systems purchased by a country on a cash basis than those 


provided under the grant military assistance program, it is less ap- 
preciated that recipient countries, such as Iran, are taking advantage 
of certain economies of scale that come from buying into the U.S. 
armed services logistics systems. In practice, this means that an Ira- 
nian logistics officer obtains spare parts for the F-4 aircraft in the same 
manner, within the same system, as does a U.S. F-4 logistics officer. 
The net result is that the Iranian forces are, in many instances, inte- 
grated into the U.S. logistics and support system. In theory, therefore, 
the U.S. Air Force has the ability, literally, to halt the operations of 
the IIAF over time by cutting off spare parts. While Iran has greater 
freedom to choose the weapons it buys, its freedom to operate that 
equipment is, in the last resort, dependent upon the good graces of the 
U.S. Government. 

This dependency can only grow as recipient countries such as Iran 
buy increasingly sophisticated U.S. weapons systems. Iran cannot be- 
come "self-sufficient" in F-4E or F-14/Phoenix operations anymore 
than a local automobile dealer can become independent of Detroit. 
Understanding the umbilical relationship between the supplier and 
recipient of advanced weapons becomes particularly important in view 
of the frequently heard arguments that a recipient such as Iran or 
Egypt can easily "switch" suppliers if it is not satisfied with its treat- 
ment by a supplier. Theoretically, this is true, and there are undoubted 
political advantages in stressing this option ; in reality, however, once 
a recipient has committed itself to a particular supplier for the mainte- 
nance of its active combat forces, it can only "switch" at the risk of 
losing its operational capabilities for a very long time. More specifi- 
cally, if there were a revolution in Iran and the Shah were replaced 
by an anti-U.S. regime, that regime would find it virtually impossible 
to maintain the current inventory of U.S. weapons without sustained 
cooperation with the United States. This might moderate a new 
regime's policies. However, if the regime were intent upon eliminating 
the U.S. role and presence in Iran, the United States could retaliate 
by bringing Iran's military machine to a virtual standstill. 

While the U.S. could "ground" Iranian forces (particularly the 
Air Force), its ability to do so is circumscribed by the political im- 
plications of such an act. The U.S. has been and is the largest seller 
of arms in the world. The forces of many nations are almost entirely 
equipped with U.S. weapons and are, consequently, dependent on the 
U.S. for follow-on support. Indeed, the U.S. Government often pro- 
vides assurances that new weapons systems can be supported through- 
out the "lifetime" of the equipment purchased. 

A decision by the U.S. to terminate such support to Iran in a com- 
bat situation could cause other past or potential purchasers to call into 
question the wisdom of relying on the U.S. as a military supplier. 
The ramifications of such a decision would not be limited to Iran. 
Senior Iranian officials, for example, have indicated that Iran's deci- 
sion not to stretch out delivery schedules of equipment it has purchased 
from the U.S., notwithstanding its unreadiness to receive the equip- 
ment, is in large part based on lessons learned from the 1974 U.S. 
embargo on arms sales to Turkey. 

Countries such as Iran, who are deeply involved militarily with 
the U.S., seem to have, therefore, a curious kind of "reverse influence" 
on the U.S. (the original U.S. decision to sell arms to Iran was based, 
in part, on the presumed influence that an arms relationship would pro- 


vide the U.S. in and over Iran). The effect of this "reverse influence." 
is to seriously limit, in political terms, the ability of the U.S. to exercise 
the policy option of cutting off military support to Iran. This option 
is thus limited to extreme situations such as an Iranian military in- 
volvement that is diametrically opposed to or threatens important 
U.S. interests. 

C. The Executive Branch Decision-Making Process ox Irax Arms 


Some important general lessons can be drawn from the Iran experi- 
ence concerning the U.S. arms transfer decision-making process. 


At the most conceptual level it can be argued that once a potential 
recipient of U.S. arms assumes, for whatever reason, great importance 
to the U.S.. the "normal'' arms transfer review processes that determine 
whether or not to sell what types of goods and services in what numbers 
become less relevant. Decisions on arms sales to such countries are 
often taken at the highest level (President and Secretary of State ) and 
must be viewed differently from more routine arms sales. 

In the case of Iran, absent any other explanation or evidence, it must 
be inferred that the 1972 decision was based upon broad geostra regie 
and political considerations rather than exacting calculations about 
the balance of military power in the Persian Gulf. When arms deci- 
sions are made at the highest level, the probability that potential fu- 
ture policy and programmatic problems will take a back seat to per- 
ceived tangible political benefits is increased. 

Once the basic policy decision was made, the Iranian armed forces, 
the U.S. Defense Department and private U.S. defense contractors 
became the primary actors. The ensuing problems might never have 
occurred but for the hike in oil prices in 1973 which gave Iran the means 
to buy far more arms than had been anticipated at the time of the 
decision. The increased oil revenues made billions of dollars available 
for new military orders. The immediate effect was to increase the stakes 
in arms to sell to Iran. 

The overall effect was to overwhelm the U.S. Government systems 
that normally execute routine arms sales. The only institution in the 
United States (or Iran) capable of managing and monitoring this 
boom in sales was the Department of Defense. During the period 197-'>- 
75, various factions within the DOD, especially the Navy and the Air 
Force, pursued their own, often competing, objectives with respect to 
major sales to Iran. "Alliances" between private industry and the pro- 
curement branches of the Air Force and Navy resulted in major sales 
efforts in Iran. In practical terms, it would have been extremelv diffi- 
cult for the U.S. Embassy in Tehran, ARMISH-MAAG. the policy 
desks in State and DOD and DSAA to exercise control over event- 
had they chosen or been able to do so. 

Thus for a period of time a situation approaching anarchy existed 
within the Executive Branch. A telling indicator of this is that when 
Schlesinger and Ellsworth came to the conclusion, somewhat independ- 
ently, that all was not well with DOD activities in Iran, their respec- 
tive efforts to deal with the problems were not fully coordinated. If the 
DOD leadership was in doubt over what was actually happening in 


Iran, it would be unreasonable to expect other Executive Branch agen- 
cies to be better informed. 

Once the various elements in the DOD. including those responsible 
for program implementation, began to recognize the extent of the 
problems of the FMS program in Iran, Schlesinger and Ellsworth 
began to exert policy level control over the entire operation. The ap- 
pointment of a Defense Representative to Iran in September 1975 
by Schlesinger. and the issuance of a directive by Ellsworth in Feb- 
ruary 1976 on DOD activities and interests in Iran were intended to 
ensure coordination within the DOD, and were seen as first but essen- 
tial steps to bring the situation under firm policv control within the 

Since the expertise on weapons systems management, logistics, 
training and manpower requirements is in Washington, not Iran, all 
DOD departments and agencies, including the services who are in- 
volved in programs in Iran, are now required to cooperate and pro- 
vide analytical backup in support of the Defense Representative's tasks 
in Iran. 

The foreign policy problems resulting from the U.S. military in- 
volvement in Iran have been less explicitly noted in the State Depart- 
ment and the White House. However, the current review of U.S. 
policy in the Persian Gulf, at least acknowledges the need for a re- 
examination of policy. 


In Iran the major difficulties with current U.S. defense programs 
relate to some but not all of the so-called "back end" (implementing) 
operations — logistics, maintenance, training, etc. This is now clearly 
recognized within U.S. defense circles, and has been communicated to 
senior Iranian officials by the U.S. Defense Representative in Iran. If 
the Defense Representative's mandate is to be performed effectively 
and routinely. ARMISH-MAAG will need to have a larger percentage 
of its personnel trained in weapons system management, planning-, and 
resource management. General Miles, the current Chief of ARMISH- 
MAAG, has a weapons systems management background himself and 
acknowledges the importance of such expertise. Whether the three 
services respond remains to l)e seen. 

The DOD's task is particularly difficult (1) because the U.S.. di- 
rectly or indirectly, is responsible for not having fully briefed the 
Iranians on the implications of its proposed purchases, and (2) 
because the issues are politically sensitive in that the responsibility 
for many of the current problems and delays lies ultimately with the 
Iranians. On the whole, the U.S. Government and U.S. contractors 
have met their schedules but the Iranians have not. Indeed, one of the 
most serious problems is that the delivery schedules for U.S. equip- 
ment have been on time while Iranian training and construction 
schedules have slipped, and the entire support infrastructure in Iran, 
is inadequate. The Iranian armed forces are working diligently to 
overcome these obstacles; the tasks confronting them, however, are 

That Iran is considering additional purchases of larsre quantities of 
sophisticated weapons, perhaps on a barter basis, indicates that Iran 
has not altered its "front-end." i.e. new purchases, policies because of 
the "back-end" difficulties of which it is now fullv aware. 


A. High Level Visitors to Iran 

There have been numerous high level visitors to Iran in the 1973-76 
period, particularly U.S. military general officers. Although the pur- 
pose of most of these visits is not known, and not all relate to the 
military sales program, the intense interest in Iran of various offices 
in the DOD and the military services is evident. 

By contrast, the number of State Department visitors is much lower. 
The reasons for the difference may be merely that there are more 
general officers with larger budgets than State Department officials. 
The difference may also relate to the diversity of the defense programs 
in Iran. 

On the other hand, it may also reflect the interest of the services in 
making new arms sales to Iran or in troubleshooting problems that 
emerged in implementing the programs after a sale had been made. 
The most significant point regarding the list of State Department 
visitors is the absence of a single visitor in 1974-75 from the Bureau 
of Political -Military Affairs, the Bureau charged with overseeing 
arms sales programs and dealing on a day to day basis with OSD/ISA 
and DSAA in the Pentagon. 

List A contains visits by general officers and other senior officials 
between September 1, 1973 and March 19, 1976, for which ARMISH- 
MAAG had primary responsibility. 

List B contains senior State Department visitors in 1974-75. 



Service Title 



GEN Carton USAF 


RADM Gerhard USN 

BG Healy. USA 

MG Appel USA 

MGStoney USAF 

BG Gordon USAF 

MG Locke USAF 

LTGEN Moats __ USAF 



MG Klingenhagen USA 

MG Hughes.... USA 


BG Werbeck USAF 

MG Hayes USAF 

LTG Hollis USA 


MG Patton USA 

RADM Feightner USN 

VADM Turner USN 

GEN Carlton USAF 

MG Glauch USAF 

BG Newby USAF 

BG Gilbert USA 

ADM Bagley USN 

BG Swenson USA 

Ch, Navy Supply Systems. 2-8 Sept 73 

Cdr, AFLC 7-9 Sep 73 


Dir, OPS 63 Sep 73 (Date 


CG, JFK Center for Mil Asst 13-17 Sep 73 

Dir, USEUCOM 15-17 Sep 73 

Cdr, AFCS 25-27 Sep 73 

Cdr, 1035 Tech Ops Gp 10-12 Oct 73 

HqCmd, USAF 12-15 Oct 73 

Cdr, 6th Tac AF (NATO) 21-23 Oct 73 

Cdr, NATO Ground Forces South Eastern 21-23 Oct 73 


DCS Log, USAREUR 4-7 Nov 73 

CG, MEDCOMEUR 4-7 Nov 73 

Dir, Int Log (AMC) 15-19 Nov 73 

Cdr, AFCS 17-20 Nov 73 

Dep Dir, J-4, USEUCOM 29 Nov-2 Dec 73 

CENTO 30 Nov-S Dec 73 

Dep CINC European Command 1-5 Dec 73 

J-7, EUCOM 1-5 Dec 73 

Dep, Naval Air Systems Command 16-19 Dec 73 

President, Naval War College 16-22 Dec 73 

Cdr, MAC 20-22 Jan 74 

DCS/Ops, MAC 20-22 Jan 74 

DCS/Log, MAC 20-22 Jan 74 

Cdr, ECA... 21-23 Jan 74 

CINCNAVEUR 5-7 Feb 74 

DCS, CE USAREUR 11-15 Feb 74 




Service Title 


MR Jacobs DOD 

BG Hill USA 

BG Werbeck USAF 

GEN Carlton USAF 

MR Tremblay State 

MR Shea DOD 

MG Heinrichs USA 

RADM Feightner USN 

ADM Moorer USN 

MR Noyes DOD 

GEN Anderson USMC 



RADM Feightner USN 


MG Kearney USAF 

BG Dunlap USA 

BG Kelly USAF 

MG Maddox USA 

BG Rippitoe USAF 



Mr Alne DOD 


MR Gibson USA 

RADM Gerhard USN 


MRMiddendorf DOD 

RADM Gerhard USN 

MR Constanty State 

MR McLucas DOD 


HON M Hoffman DOD 


MG Creech USAF 

ADM Holloway USN 

RADM Gerhard USN 

BG Swenson USA 


BG Hill USA 

MG Hinrichs USA 


MG Hall USA 

ADM Nance USN 

MG Ryder USA 

MG Yancey USA 

MR Mulier State 


GS-18 (re ESD/FMS) 10-16 Feb 74 

Ch., USMTM (Saudi Arabia) 15-16 Feb 74 

Cdr, AFCS 16-20 Feb 74 

Cdr, MAC 4-7 Mar 74 

FSO-2 4-7 Mar 74 

GS-17 4-7 Mar 74 

CG, AVSCOM 7-16 Mar 74 

Dep, Naval Air Systems Command 7-16 Mar 74 

CJCS 7-12 Apr 74 

Dep Ass't SecDef 7-12 Apr 74 

Ass'tCmdt, USMC 25-27 Apr 74 

CSAF 29 Apr-2 May 74 

Cmdt, NWC 6-8 May 74 

Dep, Naval Air Systems Command 4-7 May 74 

Dep, Nav Elec Systems Command 9-15 May 74 

MAC 14-16 May 74 

Ch, Nurses Corps, USA 18-21 May 74 

USAF Logistics 19-21 May 74 

CG, USAA Center & Aviation Sch 19-29 May 74 

Cmdr, TAC Control Wing 1-6 Jun 74 

EUCOM Cmd Insp Team 8-12 Jun 74 

F-14 Project Manager 6-11 Jun 74 

DOD/ISA (GS-17) 6-11 Jun 74 

Cdr, Nav Ed & Trng 5-18 Jul 74 

DCS Log USAREUR 15-17 Jul 74 

Dir, Ops 63 22-28 Aug 74 

F-14 Project Manager 3-7 Aug 74 

Secretary of the Navy 10-12 Sep 74 

Dir, OPS 63 10-12 Sep 74 

Dep IG, State Dept 11-12 Sep 74 

Secretary of the AF 4-7 Oct 74 

F-14 Project Manager 16-23 Oct 74 

Asst SecDef 19-24 Oct 74 

PEACE CROWN Program 19-24 Oct 74 

PEACE CROWN Program 19-24 Oct 74 

Ch, Nav Ops 3-8 Nov 74 

Ch, Nav Ops 3-8 Nov 74 

DSC, Comm Elec, USAREUR.... 4-8 Nov 74 

Ch, Mil Training Mission Saudi Arabia 16-20 Nov 74 

AVSCOM 18-23 Nov 74 

Deputy CINCEUR 27-28 Nov 74 

Dir, J-3, EUCOM 27-28 Nov 74 

Dep Chief of Staff. EUCOM 27-28 Nov 74 

Dir, J-4/7, EUCOM 27-28 Nov 74 

Dir, J-5, EUCOM 27-28 Nov 74 

FSO-1, POLAD, EUCOM 27-28 Nov 74 

CINCEUR 3-€ Dec 74 




RADM Hanks.... USN 

RADM Marshall USN 

BG Persons USA 

MG Albright.. USA 

ADM Shear USN 







MG Hinrichs... USA 


ADM Shear USN 

LTG Kornet USA 

RADM Bigley USN 

ADM Cramer.... USN 

MG Gibson USA 

MGHoefling USA 


MG Sumner USAF 

BG Mclnerney USAF 

GEN Weyland USA 


MG Green USA 

VADM Custis USN 

MG Gorman USA 

MG Kingston USA 




7-10 Jan 75 
27 Jan 75 
31 Jan-5 Feb 75 
1-5 Feb 75 
17-19 Feb 75 
21-23 Feb 75 
5-6 Mar 75 
9-17 Mar 75 
9-17 Mar 75 
4-5 Apr 75 
12-24 Apr 75 
19 Apr-1 May 75 
26-30 Apr 75 
2-3 May 75 
7-12 May 75 
16-18 May 75 
17-24 May 75 
30 May-4 Jun 75 
9-12 Jun 75 
10-15 Jun 75 
20-24 Jun 75 
11-14 Jul 75 
26-30 Jul 75 
8-12 Aug 75 
25 Sep 75 
26-29 Sep 75 
5-12 Oct 75 
7-11 Oct 75 
10-17 Oct 75 
10-17 Oct 75 
27-30 Oct 75 


Visitor Service Dates 

BG Racke USA 2-5 Nov 75 

GEN Blanchard USA 8-10 Nov 75 

VADM Wilson 1 USN 8-13 Nov 75 

MG Johansen USA 13-23 Nov 75 

GEN Huyser USAF 1-3 Dec 75 

MG Ryder USA 1-3 Dec 75 

BG DeFiori USA 18-23 Jan 76 

RADM Alvis USN 25-31 Jan 76 

GEN Deane USA 8-18 Feb 76 

MG Fix USA 8-18 Feb 76 

RADM Dowd USN 26 Feb-3 Mar 76 

MG Harris USA 5-19 Mar 76 


Visitor Title Dates 

Peter Constable Director, Office of Pakistan, Afghanistan, Bangladesh February 1974. 

Philip Stoddard Bureau of Intelligence and Research March 1974. 

Sidney Sober Deputy Assistant Secretary September 1974. 

Henry Kissinger November 1974. 

Charles Naas Country Director, Iran February 1975. 

Charles Robinson Undersecretary for Economic Affairs February 1975. 

Charles Robinson Undersecretary for Economic Affairs June 1975. 

Sidney Sober Deputy Assistant Secretary September 1975. 

Charles Robinson Undersecretary for Economic Affairs... _ October 1975. 

Carlyle Maw... Undersecretary for Security Assistance February 1976. 

Myron Kratzer Acting Assistant Secretary for O.E.S February 1976. 

B. Security Assistance Dollar Value 
[In thousands] 

A. Total grant aid and government-to-government sales (FMS) $11, 

B. FMS orders by U.S. service: 

1. Fiscal year 1950 through Fiscal year 1975: 

Army 2, 

Navy 4, 

USAF 1 3, 

2. Fiscal year 1973, $2.1 Billion: 




3. Fiscal year 1974, $3.9 Billion: 


Navy 2, 


4. Fiscal year 1975, $2.5 Billion: 


Navy 1, 


5. Fiscal year 1976, $1.3 Billion (est) 

200, 000 

800, 000 
200, 000 
300, 000 

890, 651 
468, 299 
755, 554 

629, 437 
433, 985 
853, 699 

800, 784 
166, 999 
550, 509 


Fiscal year 

Ordered Delivered 

To be 

1950-64 $1,285 

1965 68,857 

1966 207,809 

1967 144,373 

1968 79,369 

1969 239,392 

1970 113,197 

1971 397,956 

1972 523,957 

1973 2,114,503 

1974 3,917,121 

1975 2,567,903 

1976 (est) 1,256,619 

Total » 11,622,619 














2, 358, 000 $7, 906, 000 

The $11,622,619 figure includes $.101 billion undefinitized details. 

[In thousands of dollars] 

Ordered Delivered 

To be 

Aircraft 5,021,845 1,217,567 3,844,278 

Ships 1,446,815 22,670 1 424,146 

Vehicles/Wpns.... 410,933 219,429 191,504 

Ammunition 619,409 198.372 421,037 

Missiles 906,115 169,510 736,605 

Comm Eqpt 298,650 113,672 184,978 

Other Eqpt 199,340 78,739 120,600 

Construction 17,598 308 17,289 

Rep/Rehab/Ovhl 78,742 5,747 72,995 

SuppOpns 326,739 77,763 248.976 

Training 237,231 130,870 106,361 

OtherSvcs 702,433 123,513 578,920 

Total (through fiscal year 1975) 10,265,850 2,358,161 17,906.689 

» Through 1980's. 


C. List of Contractors and Personnel 


Major field of activity 

Number of 

Aircraft Electronics 


Aircraft Maintenance . 


Aircraft Engine Maintenance 

Flight Training 



Program Management.. . ... .. 


Tank Rebuilding _ 


Shipyard Construction 

Aircraft ... . 



Communications Electronics 


Computers Software . 





Missiles .. . . .. . 


Engines and Armament 


Aircraft Engine Maintenance 

Aircraft Maintenance. .. . 





Aircraft Electronics & Munitions . 


Communications Electronics . .. . 


Communications . . 


Electronics .... ... 


Aircraft Maintenance 




Aircraft Maintenance . .... ... 


Aircraft Maintenance 




Aircraft Maintenance... 


Missiles/Aircraft Maintenance. . 






Aircraft Engine Maintenance 






Air Defense Systems Training 



Shipyard Construction 








AAI Corp 

Augusta Bell 

Avco Corp/Lycoming 

Bel Helicopter Int 

Booz Allen & Hamilton. 


Brown & Root E&C 

Cessna Aircraft Co 

Collins Radio 

Computer Sciences Corp 

Emerson Electric 

Epsco Inc 

General Dynamics 

General Electric 

General Motors/Allison 

Grumman Aerospace Corp 

Hazeltine Corp 

Hughes Aircraft 


International Technical Product. 

Itek Corp 

Kaman Aerospace Corp 



Logistics Support Corp 


McDonnell Douglas 


Page Communications 




RCA Corp 


Singer Co 


Sylvania Corp 

Texas Instruments 




Note— As of October 1, 1975. 




3 1262 09113 1333